The Benefits of Internalizing Air Quality and Greenhouse Gas Externalities in the Us Energy System

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1 University of Colorado, Boulder CU Scholar Civil Engineering Graduate Theses & Dissertations Civil, Environmental, and Architectural Engineering Spring The Benefits of Internalizing Air Quality and Greenhouse Gas Externalities in the Us Energy System Kristen Elyse Brown University of Colorado at Boulder, Follow this and additional works at: Part of the Energy Policy Commons, Environmental Engineering Commons, and the Environmental Studies Commons Recommended Citation Brown, Kristen Elyse, "The Benefits of Internalizing Air Quality and Greenhouse Gas Externalities in the Us Energy System" (2016). Civil Engineering Graduate Theses & Dissertations This Dissertation is brought to you for free and open access by Civil, Environmental, and Architectural Engineering at CU Scholar. It has been accepted for inclusion in Civil Engineering Graduate Theses & Dissertations by an authorized administrator of CU Scholar. For more information, please contact

2 i TheBenefitsofInternalizingAirQualityandGreenhouseGas ExternalitiesintheUSEnergySystem By KristenE.Brown B.A.,UniversityofCaliforniaBerkeley,2010 M.S.,UniversityofColoradoatBoulder,2013 Athesissubmittedtothe FacultyoftheGraduateSchoolofthe UniversityofColoradoinpartialfulfillment oftherequirementforthedegreeof DoctorofPhilosophy EnvironmentalEngineeringProgram 2016

3 ii This thesis entitled: TheBenefitsofInternalizingAirQualityandGreenhouseGasExternalitiesintheUSEnergy System written by Kristen E Brown has been approved for the Environmental Engineering Program JanaMilford MichaelHannigan Date The final copy of this thesis has been examined by the signatories, and we find that both the content and the form meet acceptable presentation standards of scholarly work in the above mentioned discipline.

4 iii Brown,KristenE.(Ph.D.,EnvironmentalEngineering) TheBenefitsofInternalizingAirQualityandGreenhouseGasExternalitiesintheUSEnergy System ThesisdirectedbyProfessorsDavenHenzeandJanaMilford Theemissionofpollutantsfromenergyusehaseffectsonbothlocalairqualityand theglobalclimate,butthepriceofenergydoesnotreflecttheseexternalities.thisstudy aimstoanalyzetheeffectthatinternalizingtheseexternalitiesinthecostofenergywould haveontheusenergysystem,emissions,andhumanhealth.inthisstudy,wemodel differentpolicyscenariosinwhichfeesareaddedtoemissionsrelatedtogenerationand useofenergy.thefeesarebasedonvaluesofdamagesestimatedintheliteratureandare appliedtoupstreamandcombustionemissionsrelatedtoelectricitygeneration,industrial energyuse,transportationenergyuse,residentialenergyuse,andcommercialenergyuse. Theenergysourcesandemissionsaremodeledthrough2055infiveVyeartimesteps.The emissionsin2045areincorporatedintoacontinentalvscaleatmosphericchemistryand transportmodel,cmaq,todeterminethechangeinairqualityduetodifferentemissions reductionscenarios.abenefitanalysistool,benmap,isusedwiththeairqualityresultsto determinethemonetarybenefitofemissionsreductionsrelatedtotheimprovedair quality.weapplyfeestoemissionsassociatedwithhealthimpacts,climatechange,anda combinationofboth. Wefindthatthefeesweconsiderleadtoreductionsintargetedemissionsaswellas covreducingnonvtargetedemissions.forfeesontheelectricsectoralone,healthimpacting pollutant(hip)emissionsreductionsareachievedmainlythroughcontroldeviceswhile GreenhouseGas(GHG)feesareaddressedthroughchangesingenerationtechnologies.

5 iv Whensectorspecificfeesareadded,reductionscomemainlyfromtheindustrialand electricitygenerationsectors,andareachievedthroughamixofenergyefficiency, increaseduseofrenewables,andcontroldevices.airqualityisimprovedinalmostallareas ofthecountrywithfees,includingwhenonlyghgfeesareapplied.airqualitytendsto improvemoreinregionswithlargeremissionsreductions,especiallyforpm2.5. Acknowledgements TheworkpresentedinthispaperwasfundedthroughtheNASAAppliedSciences ProgramgrantNNX11AI54G,aUniversityofColoradoseedgrantfromtheRenewableand SustainableEnergyInstituteandtheNSFGKV12programattheUniversityofColorado.I wouldliketothankthepeoplewithoutwhomthisworkwouldnotbepossible.my advisors,janamilfordanddavenhenze,wereinstrumentalinthedirectionand implementationofthisresearch.iwouldalsoliketothankmichaelhannigan,shellymiller, andgregfrostfortheirinsightandeffortaspartofmydefensecommittee.ithankmatt TurnerandShannonCappsfortheirassistancewiththeCMAQmodelaswellasDan Loughlin,JeffMcLeod,andAzadehKeshavarzmohammadianforassistanceinusingand modifyingthemarkalmodel.finally,iwouldliketothankmyparentsfortheirsupport throughoutmyacademiccareer.

6 v CONTENTS Chapter1Introduction Motivation Objectives Background Damages HealthImpactingPollutantDamages GreenhouseGasDamages Methodsandorganization TheMARKALModel TheCMAQModel TheBenMAPVCEModel References Chapter2AccountingforClimateandAirQualityDamagesinFutureUSElectricity GenerationScenarios Abstract Introduction Methodology MARKALmodel EPAdatabase Damages Results SensitivityAnalysis HighDamageEstimates LowDamageEstimates LowNaturalGasPrices Discussion Acknowledgements SupplementalInformation ElectricityPortfolioandEmissionsinAdditionalCases LifeCycleEmissionsandtheEffectofIncorporating UpstreamFees TheEffectofLifeCycleVersusCombustionFees References Chapter3HowAccountingforClimateandHealthImpactsofEnergyUseCould ChangetheUSEnergySystem Abstract Introduction Methods HealthRelatedDamages GHGrelatedDamages TheMARKALModel MARKALDatabaseChanges Emissions... 72

7 vi TechnologyChanges OtherChanges ScenarioDescription CurrentEnergySystem Results Emissions IndustrialSectorTechnologies ElectricSectorTechnologies Discussion Appendix SocialCostofCarbon EffectofDatabaseChanges AdditionalResults Emissions Transportation,ResidentialandCommercial Industrial ElectricityGeneration SensitivityAnalysis CleanPowerPlan CCSCostAssumptions WindandSolarCostandConstraints ChangesDocumentation EmissionsUpdates SectorSpecificClassification Upstreamemissions GeneralProcedure Coal Geothermal Naturalgas CommercialandResidentialSectors BiomassCO2Uptake Refineries FuelEmissionType ControlTechnologies OldCoal Electricity BiomassCCS SolarPVCost ElectricityTrade IndustrialSectorChanges EfficientBoilers IndustrialSolar ControlTechnologies Applicability BoilerControls CementCCS...132

8 vii Transportation OtherChanges ChangesbyWorkbook References Chapter4EvaluatingtheHealthBenefitsofInternalizingAirQualityand ClimateExternalitiesthroughFeesintheUSEnergySystemUsing3DAir QualityModeling AbstractandPreamble Abstract Preamble Introduction Methods MARKAL EmissionFeeCases CMAQSimulationsandPerformanceEvaluationData EmissionScenarios BenMAPVCE Results AirQuality CostsandBenefits Discussion Appendix CMAQValidation PM Ozone SeasonalCMAQPMResults EmissionsandConcentrationReductions HealthImpactsandValuation FullBenMAPVCEResults References Chapter5Conclusions SummaryandConclusion SourcesofUncertaintyandIdeasforFutureAnalysis References Chapter6Bibliography...226

9 viii TABLES 2.1 Marginaldamageestimatespresentedintheliterature(values convertedfromoriginalunitstoyear2005usd/metrictonpollutant) UpstreamEmissionsinkt/PJ LifeCycleemissionsinkt/PJ(heatinput) Healthimpactingpollutantdamagesusedasfees.(Allvaluesin$/t unlessotherwisespecified.)theasterisk(*)representsvaluesthat weretakenfromadifferentliteraturesourcethantherestofthatset offees,seesourcesintext Thecostofthefeesforlifecycleemissionstranslatedto$/kWhfor twoelectricitygeneratingtechnologiesin GHGdamagesusedasfees,fromthesocialcostofcarbon(Interagency WorkingGrouponSocialCostofCarbon,2013) Theupstreamemissionsaddedbytechnologyandpollutant.Allvalues areinkt/pjandvalueswithagreybackgroundareco2equivalents becauseseparatech4andco2valueswerenotavailable.thistable doesnotincludeupstreamemissionsthatareincludedintheepa database,butdoesincludethosefromthesesources:(america s EnergyFuturePanelonElectricityfromRenewableResourcesand NationalResearchCouncil,2010;ArvesenandHertwich,2012; Burkhardtetal.,2012;Kaplanetal.,2009;KoroneosandNanaki, 2012;NewEnergyExternalitiesDevelopmentforSustainability,2008; SantoyoVCastelazoetal.,2011;SolliandReenaas,2009;Wangetal., 2012) TheEmissionsvaluesimplementedinthemodifiedversionof MARKALforbiomassgrowth,aswellastheintermediatevalues.LUC standsforlandusechange,ngstandsfornaturalgas.thefueluse valuesareusedasintermediatevaluestocalculateemissions,butthe fuelusedingrowingbiomassisnotconsideredinthemarkalfuel pathway.co2ubreferstotheco2uptakefrombiomassgrowth.all emissionsexceptforco2areinkt/mtbiomass,whileco2is representedastonsofco2pertonofbiomass.theco2uandco2ub parametersareinkt/mt SubsidyforbiomassCO2uptake ThemodifiedinvestmentcostsvaluesforsolarPVelectricity generationin$/kwofcapacity Themultipliersusedtodefineconstraintsonparabolictroughsolar heatingusedintheindustrialsector NOxcontrolnaming.ICEstandsforinternalcombustionengine,PH standsforprocessheat,regreferstoreciprocatingengine,ng representsnaturalgas,andcctreferstocombustionturbines Theboilercontrolsandconversiontechnologiestowhichtheyare applied.the*referstothetwolettersectordesignationsusedinthe EPAreleaseofMARKAL,e.g.FDforthefoodsubsector.Filterswere

10 ix designedtoapplytheconstraintsbasedontableb.7withnamesas follows.filternames:coabolcon,coabollnb,coabolnox, COABOLSO2;RFLBOLCON,RFLBOLLNB,RFLBOLNOX,RFLBOLSO2; DSTBOLCON,DSTBOLLNB,DSTBOLNOX,DSTBOLSO2;NGBOLCON, NGBOLLNB,NGBOLNOX Theenginecontrolsgroupedbyfueltype,whichareconstrainedby thefollowingfilters:regrfl,regdst,regnga,regoil,reglpg; REGCTRLRFL,REGCTRLDST,REGCTRLNG,REGCTRLOIL, REGCTRLLPG Thecontroltechnologiesforsteamturbinesbyfuelandconversion technologies.asforothernames,the*representsthetwolettercode associatedwitheachindustrialsubsector.thefilternamesassociated withthistableare:rflbst,rflbstlnb,rflbstnox,rflbstso2; DSTBST,DSTBSTLNB,DSTBSTNOX,DSTBSTSO2;NGBST,NGBSTLNB, NGBSTNOX;COABST,COABSTLNB,COABSTNOX,COABSTSO2; LPGBST,LPGBSTLNB,LPGBSTNOX,LPGBSTSO2;OILBST,OILBSTLNB, OILBSTNOX,OILBSTSO Thecontrolsforindustrialprocessheatbasedonconversion technologyandindustrialsubsector(category)towhichtheyare applied.forthistablethefilternamesareshownwithinthetable itself.forprocessheatapplicabilityvariesbyindustrialsubsector,but isapplicabletoallcombustionfuelswithinthesubsector.electricity andconcentratedsolarpowerarenotcombustionfuelsandtherefore thecontroltechnologiesarenotapplicabletoprocessheatusingthese fuels FeesappliedinHIPpolicycase.(Allvaluesin$/tonexceptnaturalgas usewhichisinmillion$perpetajoule.)thenaturalgasusefeeonly appliesforthecommercialsector,becauseemissionsspecificdamages werenotavailableforthissector Scalingfactorsforpollutantsandsectorsforeachcaseandregion EnergysystemcostsassociatedwithfeesfromMARKALinmillion 2005USD MortalityrelatedbenefitsbyregioninmillionsofUSD ThebenefitsassociatedwiththefeecasesinMillionsofUSD.The DamageVscaledemissionsarecalculatedusingEquation4.6forGHG andhipdamagesusingtheemissionschangesfrommarkal PM2.5evaluationstatistics(MdnBisthemedianbiasinµg/m 3,MdnEis themedianerrorinµg/m 3,NMdnBisthenormalizedmedianbiasin %,NMdnEisthenormalizedmedianerrorin%,NMBisthe normalizedmeanbiasin%,nmeisthenormalizedmeanerrorin%, RMSEistherootmeansquarederrorinµg/m 3,andRisPearson s correlationcoefficient.) Ozoneevaluationstatistics(MdnBisthemedianbiasinppb,MdnEis themedianerrorinppb,nmdnbisthenormalizedmedianbiasin%, NMdnEisthenormalizedmedianerrorin%,NMBisthenormalized

11 x meanbiasin%,nmeisthenormalizedmeanerrorin%,rmseisthe rootmeansquarederrorinppb,andrispearson scorrelation coefficient.) TheapproximatepercentchangeinemissionsfromtheNoFeecaseas wellasthepercentchangeinconcentrationfromthenofeecase.the emissionsreductionsarebasedontotalmarkalemissions reductionsforeachspeciesbyregionandmaynotaccurately representtheemissionsreductionsincmaqdototheinclusionof nonvenergysectoremissionsincmaq HealthImpactFunctionsforPM HealthimpactfunctionsforO NonVmortalityhealthimpacts(HAstandsforHospitalAdmissions, AMIstandsforAcuteMyocardialInfarction,ERstandsforEmergency Room) MortalityincidenceforO3andPM2.5byhealthimpactfunction Averagemarginaldamageestimatesbyspeciesfromseveralstudiesin $/ton

12 xi FIGURES 1.1 Therelationshipbetweenthemodels(red),theirinputsandoutputs (blue),andcalculationsperformedwiththeresults(purple) Electricityproductionbyfueltypeinfourcases:BAU,lifecyclecriteria pollutantfees,lifecycleghgfees,andlifecyclecriteriapollutantand lifecycleghgfees. Other includesoil,biomass,waste,and geothermalgeneration EmissionsofSO2andNOxfromelectricitygenerationineasternand westernregionsoftheus.theerrorbarsrepresentnationaltotal emissionswithhighandlowsensitivityfeesinplace LifecycleGHGemissions(inCO2Ve)infourdifferentcaseswherethe errorbarsrepresentthetotalemissionswithhighandlowcriteria pollutantfees Electricitygeneratedbyfueltypein2035forthecasesrun.The other categoryincludesoil,biomass,msw,andgeothermal SO2emissionsgeneratedduetoelectricityproductionin2035across cases NOxemissionsgeneratedduetoelectricityproductionin2035across cases GHGemissionsproducedduetoelectricitygenerationin2035across cases PM10emissionsproducedduetoelectricitygenerationin2035across cases FuelUsein2035forcaseswithfeesoncombustionandlifecyclefees Detailoffuelusein2035forcaseswithfeesoncombustionemissions andlifecycleemissionfees NOxemissionsin2035incaseswithfeesappliedtocombustionand lifecycleemissions SO2emissionsin2035incaseswithfeesappliedtocombustionand lifecycleemissions GHGemissionsin2035incaseswithfeesappliedtocombustionand lifecycleemissions Totalfuelusedorelectricityproducedbyeachsectoracrosstimein thebasecaseasaproxyforincreaseindemandforenergyservices. Vehiclemilestraveledalsoincrease,buttransportationfueluseis mitigatedbyincreasedefficiency HIPemissionsin2045forselectedcases.Theresultsforallcasescan befoundintheappendixinfigures3.17v21.thelargestcombinedfee caseincludeshighhipfeesand2.5%averageghgfees CO2emissionsbyenergyusesectorin2045forvariousfeecases Fueluseandenergyefficiencyinindustrialboilersin Fuelsandtechnologiesusedtogenerateelectricity.The"other" categoryincludesoil,geothermal,andwasteenergy...88

13 xii 3.6 Thefeescollectedbysectorineachcasein2045inyear2005USD Thereductioninemissionsin2045comparedtoNoFeecase emissionsin2045fortheelectricandindustrialsectorsaswellas totalemissionsreductionsforthatcase Methaneemissionsinthebasecaseusingtwodatabaseversions CO2emissionsinthebasecaseusingtwodifferentdatabaseversions NOxemissionsinthebasecaseusingtwodifferentdatabaseversions PM2.5emissionsinthebasecaseusingtwodifferentdatabase versions SO2emissionsinthebasecaseusingtwodifferentdatabaseversions VOCemissionsinthebasecaseusingtwodifferentdatabaseversions Electricitygenerationbyfueltypeinthebasecaseusingtwodifferent databaseversions,theepareleaseandthemodifiedversionused here.theleftcolumnforeachyearpresentstheresultsfromthe modifieddatabase,andtherightcolumnpresentstheepadatabase resultsforthesameyear Industrialboilersinthemodifiedbasecaseusedinthisanalysis IndustrialboilersintheEPAreleasedbasecase NOxemissionsin2045forallcasesandin2010forthebasecase SO2emissionsin2045forallcasesandin2010forthebasecase PM2.5emissionsin2045forallcasesandin2010forthebasecase VOCemissionsin2045forallcasesandin2010forthebasecase CH4emissionsin2045forallcasesandin2010forthebasecase Industrialprocessheatfuelusein2045forallcasesandin2010for thebasecase Thecontroltechnologiesusedintheindustrialsectorasafractionof theenergyusecategorythatthespecifiedcontrolisappliedto.lnb referstolownoxburners,scrreferstoselectivecatalytic Reduction,DIFreferstoadryinjection/fabricfiltersystem,AFRrefers toadjustingtheairtofuelratio,igrmeansretardingtheengine,mkf referstomidkilnfiring,espisanelectrostaticprecipitator,ffisa fabricfilter,andfgdisfluegasdesulfurization Fuelusefor other industrialenergyneedsforallcasesin2045and forthebasecasein ThenineMARKALregions,forwhichemissionschangesare calculatedforcmaqinputs.thisfigureismodifiedfromthemarkal US9regiondatabasedocumentation(USEPA,2013b) (a)modeledandobservedpm2.5concentrationsin2007.theaverage ofthe24hraverageoverfebruary,may,august,andnovemberis plotted.(b)modeledandobservedozoneconcentrationsin2007.the plotvaluesaretheaverageofdaily1hourmax(mda1)forthemonth ofaugust AnnualaveragemodeledPM2.5concentrations Therelationshipbetweenemissionsreductionsandreductionsin PM2.5concentrationsbyregion.Thenumberslabeltheregion associatedwitheachpoint.theemissionsreductionsarebasedon

14 xiii totalmarkalemissionsreductionsforeachspeciesbyregionand maynotaccuratelyrepresenttheemissionsreductionsincmaqdoto theinclusionofnonvenergysectoremissionsincmaq AverageofthehighesthourlyaverageO3concentrationeachday,or MDA1,inAugustinppbfortheNoFeecaseandthedifferenceinppb ofeachfeecasecomparedtothenofeecase NumberofdaysinAugustwhereO3MDA8exceeds70ppb,onlywhen suchexceedancesoccurovertheuslandareas.forthenofeecase therewere5106totalexceedancesforthe31daysacrossall6019 applicablegridcells,withthemostinasinglecellbeing26.withhip fees,1577totalexceedancesoccurinaugustwiththelargestinany onecellbeing26.forghgfees,25isthelargestinanysinglelocation and3031totalexceedancesoccur.forcombinedfees25isthelargest inanysinglecelland1428exceedancesoccur Damagescaledemissionsbypollutantandemissionsourceforthe HIPfeecase.ValuesareinMillionUSD.INDemissionsareforthe industrialsectorandelcemissionsarefortheelectricsector PM2.5validationscatterplot PM2.5validationhistogram MonthlymapsofmodeledandobservedPM2.5for Sulfatevalidationscatterplots Sulfatevalidationhistogram Nitratevalidationscatterplots Nitratevalidationhistograms O3validationscatterplots(ppb) O3validationhistograms ModeledandobservedO3concentrationsfor MonthlyaveragePM2.5concentrations...192

15 1 Chapter1 Introduction 1.1Motivation EnergyuseintheUSisinfluencedbymanyfactors,butnotallconsequencesare consideredwhenchoosingelectricitysources.theemissionofpollutantshaseffectson bothlocalairqualityandglobalclimate.externalitiesareactivitiesthataffectthewellv beingofanunrelatedgrouporindividualoutsidethemarketmechanism.damagesarethe monetaryvalueofexternalities,suchasthevalueofmedicalbillsfromadversehealth effects.forexample,thehealthrelateddamagesfromelectricitygenerationintheusin 2005havebeenestimatedat$62billionfromcoalplantsand$740millionfromnaturalgas plants(nationalresearchcouncilcommitteeonhealth,environmental,andother ExternalCostsandBenefitsofEnergyProductionandConsumption,2010).Greenhousegas (GHG)relateddamagesfromelectricitygenerationin2005were$118billionifcalculated withthesocialcostofcarbon(interagencyworkinggrouponsocialcostofcarbon,2013) fortheyear2010witha2.5%discountrate.thisstudyaimstodeterminehow incorporatingthesedamagesintoenergycostswouldimpactenergyuse,emissions,and healthintheus. Usingfeestoincorporatedamagesintothecostofenergyencouragespracticesthat reduceexternalities(pigou,1962).thesearesometimesreferredtoaspigouviantaxes. Accordingtoeconomictheory,themostefficientpoliciestoaddressexternalitiesare directedattheexternalitysuchasafeeonemissionsratherthanafeeonelectricity.iffees areappliedtoelectricitythenthereisanincentivetouselesselectricity,butthereisno financialbenefittochangethewaytheelectricityisproduced,evenifthatwouldfurther

16 2 reduceemissions.emissionsfeesarelikelytoloweremissionsrates,whichreducesthe negativeeffectsonairqualityandclimateandinturnonhumanhealthandwelfare. Emissionscanbereducedduetoaswitchinthefuelsusedorapplicationofemission controltechnologies.byconsideringfeesbasedondamagesinsteadofanemissionor technologygoal,eveniffeescauseanincreaseinthepriceofelectricity,theoverallsocietal costrelatedtoelectricitywilldecreasebecauseexternalitycostsarelowered. 1.2Objectives Inthisthesis,weevaluatehowincorporatingexternalitycostsintothecostof energywouldchangeenergyuse,emissions,airquality,andhealthintheus.arangeof damageestimatesfromtheliteratureisusedtoconstructpolicyscenarios,allofwhich prescribeasetofdamagevbasedemissionfees.thefeescenariosconsiderdamages associatedwithghgsandhipsacrossarangeofestimates.theepaus9regionmarkal (MARKetALlocation)modelisusedtoevaluatechangestotheUSenergysystemthrough theyear2055underthesepoliciescomparedtoacasewithnopolicies.withmarkal,we candeterminehowmuchemissionschange,whatlevelofcovreductionswecanexpect,and whattypeoftechnologiesareusedtoreduceemissions.wealsocomparemarkalresults forcaseswithfeesappliedonlytoelectricityandcaseswherefeesareappliedtoallenergyv usesectors.thecasewithallsectorsconsideredshouldhavemoreoptionstoreduce emissions.thecmaq(communitymultiscaleairquality)modelisusedtoevaluatetheair qualityimplicationsofemissionschangesprojectedfor2045forasubsetofthefees.with CMAQ,wecandeterminewhatdegreeofairqualityimprovementcanbeexpectedfromthe emissionsreductionsandwhetherairqualityisdegradedanywheredespiteemissions reductions.wecanalsoexaminethedistributionofairqualityimprovements.benmapvce

17 3 (theenvironmentalbenefitsmappingandanalysisprogramvcommunityedition)isthen usedtodeterminethechangeinhumanhealththatwouldoccurduetotheemissions reductionsandtheeconomicvalueassociatedwiththatchange.usingbenmap,wecan determinewhetherthebenefitsoutweighthecostsofpolicyandcomparebenefitsbetween feecases.wealsocomparethebenefitsagainstemissionsscaledbythefeestoseehow closelythissimplemethodmatchesthemorecomplexcalculation. 1.3Background Inadditiontoairqualityandclimatebenefits,policiesbasedonfeestructuresmay alsobeabletoprovideadditionaleconomicbenefits.theuscongressionalbudgetoffice (CBO)evaluatedacarbontax(CongressionalBudgetOffice,2013b)andconcludedthata taxof$25/metrictonofco2veincreasingat2%peryearwouldincreasefederalrevenueby $1.06trillionduringthefirstdecade.Anotherreport(CongressionalBudgetOffice,2013a) saystherevenuesfromsuchataxcouldbeusedtoreducedeficitoroffsetothertaxes, whichwouldbothreducetotalcosttotheeconomyofthefee.thereportstatesthatusing therevenuetoproviderelieftothoseburdeneddisproportionatelywouldnotreducethe totaleconomiccosts,butcouldbeauseforatleastaportionoftherevenue. TherearefrequentlyairqualitycoVbenefitsassociatedwithmeetingclimategoals. Chenetal.(2013)found199millionyear2009USDoftotalsocialbenefitsintheU.S.,not includingthecostofprematuremortality,associatedwithindustrialenergyconservation designedtoreduceghgemissions.zapataetal.(2013)modeledtheairqualityresulting fromsuccessfulcompliancewithcalifornia sab32ghgreductionpolicy.theyfounda 6.2%reductioninannualPM2.5relatedmortalityin2030,althoughsomepartsofCalifornia sawanincreaseinconcentrationsofpm2.5duetoashiftinlocationofcombustioncreated

18 4 byusingrenewablefuels.kleemanetal.(2013)consideredtheeffectsoftransportation relatedghgreductionincaliforniaonpm2.5.theyfoundthatpopulationweightedpm2.5 concentrationsincaliforniawouldbereducedbyupto9.5%byshiftingtransportationtoa systemwithlowerghgemissions.thompsonetal.(2014)usetheunitedstatesregional EnergyPolicy(USREP)modeltodeterminethecostsandapproximateemissionschanges associatedwiththreedifferentclimatepolicies:acleanenergystandard,acapandtrade regulation,andatransportationfuelstandard.theythenusecmaqwithscaledemissions todetermineambientconcentrationsofo3andpm2.5andcalculatemonetizedhealthcov benefitswithbenmap.theyfindthatmoreflexiblepoliciesarelesscostly,andthattheair qualitycovbenefitsmaybelargerthanthecostsofthepolicy,whichwillhavefurther climatebenefits.saarietal.(2015)alsofindthathealthcovbenefitsachievedasaresultof GHGemissionreductionsmayfullyoffsetthecostsofreducingGHGemissions,althoughthe distributionofthehealthbenefitsisnotuniformacrosstheus. Inthisthesis,weevaluatehowincorporatingexternalitycostsintothecostof energywouldchangeenergyuse,emissions,andairqualityintheunitedstates.arangeof damageestimatesfromtheliteratureisusedtoconstructpolicyscenarios,allofwhich prescribeasetofdamagevbasedemissionfees.thefeescenariosconsiderdamages associatedwithghgsandhipsacrossarangeofestimates.theepaus9regionmarkal modelisusedtoevaluatechangestotheusenergysystemthroughtheyear2055under thesepoliciescomparedtoacasewithnopolicies.thecmaqmodelisusedtoevaluatethe airqualityimplicationsofemissionschangesprojectedfor2045forasubsetofthefees. BenMAPisthenusedtodeterminethechangeinhumanhealththatwouldoccurduetothe emissionsreductionsandtheeconomicvalueassociatedwiththatchange.themodeled

19 5 policiesapplyfeesuniformly,withoutregardtothelocationoftheemissions,buttheair qualityresultsfromcmaqandhealtheffectsfrombenmapvceareexaminedtodetermine ifthepolicybenefitssomeareasmorethanothers. Feesarenottheonlypotentialsourceofenergysystemchanges;emissionsalso changebasedonchangesinthefuelsupply.althoughnaturalgasistoutedasabridgefuel (Monizetal.,2011)toalowcarbonfuture,climatepolicyisneededtoreduceradiative forcingwithincreasednaturalgasuse.mcjeonetal.(2014)studiedtheeffectofincreased supplyanddecreasedpriceofnaturalgas,intendedtorepresentaglobalincreasein hydraulicfracturing,andfoundthatthiswouldnotleadtoareductioninco2emissions.in theabsenceofadditionalclimatepolicy,theincreaseduseofnaturalgaswouldreduceco2 emissionsfromcoal,butalsoleadtoloweruseofrenewableandconservation technologies,resultinginsimilarco2emissionstothebaselineprojection.whenthe increaseinfuguitivemethaneemissionsisconsidered,abundant,cheapnaturalgascauses anincreaseinradiativeforcing,althoughthismaybesmalldependingontherateof fugitivemethaneemissions,whichvarieswidelyintheliterature.ifclimatepoliciesare addedtothecheapgasscenario,reductionsinemissionsarepossible.sheareretal.(2014) analyzedtheeffectofabundantnaturalgasfortheusspecifically.theyalsofindthat withoutadditionalpolicy,theincreasedsupplyofnaturalgasdoesnotreduceghg emissions,evenwhenmethaneleakageratesareassumedtobelow.morenaturalgas slowstheimplementationofrenewableswithoutadditionalpolicyspecificallytargetedat renewables(notjustacarbontaxorcap).also,thelowpriceofnaturalgasleadstolower energyprices,whichleadstoincreasedfueluse.mcleodetal.(2014)evaluatedtheeffect ofnaturalgaspriceandsupplyandfoundthatghgemissionswerenotaffectedbythese

20 6 assumptionsatthenationallevel,buttherearedifferencesataregionallevel.they analyzedtherockymountainregion,whichhasamplerenewableresourcessothereare changesintheghgemissionswithinthatregionfordifferentassumptionsoffuturenatural gascost. Therearesometypesofbenefitswedonotconsiderinthisdissertation.Westand Fiore(2005)foundthatglobalexposuretoO3isreducedwhenmethaneemissionsare reduced,leadingtohealthbenefits.whileweexaminethehealthcovbenefitsofgreenhouse gasfeesduetocovreducedemissions,thespatialscaleforouranalysisisnotdesignedto considertheeffectofmethaneono3concentrations.wealsodonotconsidertheclimate impactsofothersovcalledshortvlivedclimateforcers,suchasblackcarbonandsulfate aerosol.anenbergetal.(2012)analyzedtheeffectofemissionscontrolsdesignedto reduceshortlivedclimateforcersandfoundthatblackcarbonreductionscanleadto significanthealthbenefits.shindell(2015)calculateddamagesinaslightlydifferentwayto thatconsideredherebydefiningthe socialcostofatmosphericrelease. HisglobalVscale evaluationincludedbothclimateandairqualityeffectsforvariouspollutants,including climateimpactsofaerosolsforwhichweconsideronlythehealthimpactsinthis dissertation.shindellfoundthattheairqualityrelatedhealtheffectsdominateforaerosol relatedspecies,whichindicatesthatourmethodiscapturingmuchofthedamages.the healthandclimatedamagesforapollutantarenotalwaysinthesamedirection,soitis possiblethatwhenfeesreduceemissionsofso2,thereisaclimatedisbenefitthatisnot beingaccountedfor.whileweconsiderhealtheffectsofo3andpm2.5,wedonotconsider benefitsfromloweringemissionsoftoxicpollutantssuchasmercuryandbenzene.these pollutantscancausenegativehealthimpactsincludingbirthdefectsandcancer.in

21 7 addition,thereareexternalitiesassociatedwithexposurepathwaysotherthanair.runoff ofwasteproductsfromresourceextractioncanimpactwaterquality,leadingto contaminateddrinkingwaterorwaterwaysthatareunsafeforfishandwildlife.thereare alsoadditionalecosystemimpactsbothforpollutantcategoriesthatweconsiderandthose thatareoutsidethescopeofthisstudy.someoftheseincludeozonedamagetoplants, reducedvisibility,andalteredchemistryofwaterways. 1.4Damages Severalstudieshaveinvestigatedthesourceandvaluesofexternalitiesassociated withelectricitygeneration.burtrawetal.(2012)andtheinteragencyworkinggroupon thesocialcostofcarbon(2010)bothstudiedtheexternalcostofco2emissions.the EuropeanExternE(EuropeanCommission,1995)projectcalculatedexternalcostsof energytotheenvironment.thestern(2007)reviewcametotheconclusionthatthe benefitsofactiontoavoidclimatechangeandtherelatedexternalitiesoutweighthecosts. Levyetal.(2009)modeledthedamagesfromcoalfiredpowerplantsintheUS,andMuller etal.(2011)estimatedusairpollutiondamagesfromallsectors.severalofthesestudies suggestthatthedamagestheyreportcouldbeappliedasfeesonemissionstointernalize externalities $Health$Impacting$Pollutant$Damages$ First,wewilldiscusshealthimpactingpollutant(HIP)damages.WeconsiderNOx, PM2.5,PM10,SO2andVOCasHIPs.Forhealthimpacts,thedamagevaluesarelocation dependentbecauseemissionsthatarelocatednearpopulationcenterswilloftenaffect morepeoplethanemissionslocatedinruralareas(e.g.,fannetal.2009).although

22 8 damagesarenotvariedbylocationinthisstudy,someofthelocationdependenceis capturedbyusingdifferentdamagevaluesfordifferentsectors,forinstanceindustrial emissionstendtobeclosertopopulationcentersthanelectricitygenerationemissions, thereforeindustrialdamagestendtobehigherthanelectricsectordamagespertonof emission.themajorityofthedamagesfromhipsareduetoprematuremortality associatedwithchronicexposuretopm2.5(popeetal.,2002).otherhealtheffectsinclude chronicbronchitis(abbeyetal.,1993),andrespiratoryandcardiovascularhospitalization (Burnettetal.,1999). Thereareafewreasonsfordiscrepanciesinpublisheddamageestimates.We thereforesurveyedseveralhipdamagestudiesintheliteratureandconsiderthreesetsof fees(low,mid,high).whetherornotageistakenintoaccountwhenapplyingthevalueof StatisticalLife(VSL)tomortalitieshasalargeeffectonthedamagevalue.Usingauniform VSLcanproduce50%highermarginaldamagesthandifferentiatingbyage(Mulleretal., 2011).Mulleretal.(2007;2011)chosetodifferentiateVSLbasedonagebecausethe estimatesofvslarebasedonaworkingagepopulationbutmortalitiesfromairpollution affecttheelderlymoreoften.thereisnoconsensusregardinghowage,lifeexpectancyand otherfactorsshouldbeappliedwhendifferentiatingthevslformortality(levyetal., 2009)sotheotherstudiesdonottakeageintoaccount. Anotherfactorthatcancausedifferencesinmarginaldamageestimatesiswhat sourcesofpollutionareconsidered.thestudiesbymulleretal.(2007;2011)andfannet al.(2009;2012)considermanysourcesofemissionswhilenrc2010focusesonegus combustingcoalandnaturalgas.mulleretal.(2011)distinguishthesourcesofemissions bystackheightratherthansourcetype.variationsinpopulationexposurealsocontribute

23 9 todifferencesamongdamageestimates.inurbanareas,atonofpollutantwouldaffect morepeopleandhavehigherdamagesthaninaruralarea.mullerandmendelsohn(2007) considerurbanandruraldamagesseparately,whilefannetal.(2009)onlyconsiderurban effects.fannetal.(2012)alsoconsiderthebenefitachievedbyareductionofpollution, ratherthanthedamagescausedbyanadditionalquantityofpollution. SincemortalityfromPM2.5isasignificantcomponentofthedamageestimates,the choiceofthecorrespondingconcentrationvresponsefunctionsisalsoimportant.the NationalResearchCouncil(2010)andMulleretal.(2011)usedPopeetal.(2002)and Woodruffetal.(2006)torelatePM2.5exposuretomortality;Fannetal.(2012)used Krewskietal.(2009) $Greenhouse$Gas$Damages$ GlobalclimatechangeiscausedinlargepartbyenergyrelatedemissionsofCO2, methane,andotherghgs(ciaisetal.,2013).theseemissionscanleadtoglobalchangesin temperature,weatherpatterns,andwatersystems(kirtmanetal.,2013).althoughthereis highuncertaintyaboutthespeedanddegreewithwhichchangesmighttakeplace,the changesarestillaseriousconcern.severeweatherchangesarepredictedandsomeare alreadyobserved,includingdecreasesofsnowandicecover(vaughanetal.,2013), changesinprecipitationpatterns(boucheretal.,2013),risesinsealevel(rheinetal., 2013),andshiftsinecosystemstructuresuchasalteredfoodwebsormigrationofanimals (Ciaisetal.,2013).Therearealsoeffectstohumanhealthandwelfare,whicharenot uniformthroughouttheworld(kirtmanetal.,2013).duetosomeoftheecologicalchanges mentionedearliertherewillbeashiftinwateravailabilitythatcancausecroplossand disease,especiallyinregionsalreadystressedforwater(dasguptaetal.,2014).the

24 10 combinationoftemperatureandwateravailabilitychangeswillhaveprofoundeffectson agriculture.whileyieldswillincreaseinsomeplaces,someregionsthatcurrentlydepend onagriculturemayfindthelandunabletocontinuetosupporttheircrops(porteretal., 2014).Theseeffectsareimportantexternalitiesforenergyuse. Giventhebroadrangeofimpactsofclimatechange,occurringonvastlydifferent temporalandspatialscales,anduncertaintiesassociatedwithestimatingtheseimpacts, therearelargediscrepanciesintheestimatedvalueofdamagesfromclimatechange.the NationalResearchCouncil(2010)foundthatalmostallvariationinmarginaldamage estimatesderivesfromdifferencesinassumptionsofdiscountrateandthemagnitudeof damagesfromclimatechange,especiallywhetherunlikelybutcatastrophiceffectswere considered.thegreenhousegasdamagesusedinthisstudyaretakenfromthesocialcost ofcarbon(scc)usedinregulatoryimpactanalysisbytheusgovernment(interagency WorkingGrouponSocialCostofCarbon,2013).Thereasonforevaluatingthesecost estimatesissothatvariousgovernmentagenciescanevaluatethecostorbenefitof regulationstheyareconsideringthatmightalterco2emissions.thesccisdesignedtobe usedfor regulatoryactionsthathave marginal impactsoncumulativeglobalemissions. (InteragencyWorkingGrouponSocialCostofCarbon,2010)Thefirstsetofestimateswas releasedin2010andarevisedsetofestimateswasreleasedin2013.bothestimateswere createdusingthesamemethodology,buttheupdatedestimatesusemorerecentversions oftheintegratedassessmentmodels.thesccdocumentationrecommendsconsideringthe fullrangeofvaluestheyreportbecausetherearemanyuncertaintiesinvolved.wehave consideredthefoursetsofdamagevaluesfromthe2013sccinfeescenarios.thefees

25 11 wereappliedtoco2andch4.thefeeswereadjustedforch4usingthe100yearglobal warmingpotential(gwp)of28(myhreetal.,2013). 1.5MethodsandOrganization Threemodelsareusedtoevaluatetheeffectsofseveralpossiblefeescenarios,as depictedinfigure1.1.themarkalmodelisusedfirsttoevaluatetheeffectsoffeeson emissionsfromenergyuse.theemissionresultsfrommarkalarethenusedtodetermine futureemissionsinputstocmaq.cmaqcalculatesthechangesinairqualityresultingfrom thereducedemissions.benmaptakestheairqualitychangesasinputstodeterminethe changeinhealthassociatedwiththepoliciesandthemonetaryvalueassociatedwiththose changes.

26 12 Figure1.1Therelationshipbetweenthemodels(red),theirinputsandoutputs(blue),and calculationsperformedwiththeresults(purple) $The$MARKAL$Model$ ThefirstportionofthisstudyattemptstodeterminehowimplementingdamageV basedemissionsfeeswouldchangehowenergyisusedintheusinthecomingdecades. ThisisdoneusingtheMARKALmodel,whichisanenergysystemmodelthatisusedhere tocompareenergyscenarios.markalischosenbecauseofitsthoroughdescriptionofthe USenergysystemandtheabilitytomodelavarietyoffees(Loulouetal.,2004).MARKAL considerstheeconomicadvantagesofdifferenttechnologiesandallowsusersto incorporateexternaldamagestobeconsideredascosts.chapter2ofthisthesispresents theenergyandemissionschangeswhendamagesareinternalizedonlyintheelectric

27 13 powersector.chapter3usesamorerecentdatabasewiththemarkalmodeltodiscuss theenergyandemissionsresultingfromfeesappliedtoallenergyusesectorsinmarkal. OncetheeffectofthemodeledpoliciesonemissionsisdeterminedusingMARKAL,the effectofthesepoliciesonambientairqualityaremodeledusingcmaq.emissions informationbyitself,doesnotgivepolicymakersacompleteviewoftheeffectsofpolicy, butachemicaltransportmodelcantranslatepredictedemissionsintoairquality $The$CMAQ$Model$ CMAQisathreeVdimensionalEulerianchemicaltransportmodel(ByunandSchere, 2006)thatsimulatesthechemicalandphysicalprocessesthatalterandtransport pollutantsthroughtheair.aneulerianmodelusesagridthatremainsfixedinspace,as opposedtoalagrangianmodelthatfollowsanairparcelorplume.theeulerian frameworkisbestsuitedforevaluatingairqualityacrossawiderangeofdifferent locationssimultaneously.asachemicaltransportmodel,meteorologyisprevcalculatedand usedasaninputtocmaq,thusenablingsimulationofmultiplepollutantsandtheir complexchemicalinteractionsatonce.inchapter4,thedetailsofthecmaqsimulations forpm2.5ando3arefurtherdescribed,andmodelestimatesofthedistributionsofthese speciesarecomparedtoinsitumeasurements $The$BenMAPFCE$Model$ BenMAPVCEwascreatedbytheUSEPAtoestimatehealthimpactsandeconomic benefitsrelatedtochangesinairquality(usepa,2013a).themodelincludesavarietyof healthimpactfunctionsthatcanbechosenbytheuser.thesefunctionsrelatechangesin airpollutantconcentrationswithchangesinhealth.thiscalculationconsiderstheexposed population,thebaselineincidencerateoftheeffect,theconcentrationofthepollutants

28 14 considered,andtheconcentrationvresponsefunctionchosentorelatethepollutantstothe healtheffects.benmapvceconsidershealtheffectsassociatedwithozoneandpm2.5.the pollutantconcentrationsfromcmaqwillbeusedasaninputtothebenmapvcemodel. AfterdeterminingtheairqualityundervariouspoliciesusingCMAQ,wecandeterminethe monetaryvalueofthebenefitsoftheemissionsreductionusingbenmapvce.inthis dissertationitwillbeusedtodeterminethebenefitofimplementingdamagebasedfeesin theus.chapter4discussestheairqualityandhealthimpactsassociatedwiththechanges inchapter3,andchapter5presentstheoverallconclusionsfromthisworkaswellasa discussionofuncertaintyandpossibletopicsforfutureresearch. 1.6References Abbey,D.E.,F.Petersen,P.K.Mills,andW.L.Beeson.1993.LongVTermAmbient ConcentrationsofTotalSuspendedParticulates,Ozone,andSulfurDioxideand RespiratorySymptomsinaNonsmokingPopulation.Arch.'Environ.'Health48(1): Anenberg,S.C.,J.Schwartz,D.Shindell,M.Amann,G.Faluvegi,Z.Klimont,G.JanssensV Maenhout,etal.2012.GlobalAirQualityandHealthCoVBenefitsofMitigatingnearV TermClimateChangethroughMethaneandBlackCarbonEmissionControls. Environ.'Health'Perspect.120(6): doi: /ehp Boucher,O.,D.Randall,P.Artaxo,C.Bretherton,G.Feingold,P.Forster,V..Kerminen,etal CloudsandAerosols.InClimate'Change'2013:'The'Physical'Science'Basis.' Conribution'of'Working'Group'I'to'the'Fifth'Assessment'Report'of'the' Intergovernmental'Panel'on'Climate'Change,editedbyT.F.Stocker,D.Qin,G.K. Plattner,M.Tignor,S.K.Allen,J.Boschung,A.Nauels,Y.Xia,V.Bex,andP..Midgley. Cambridge,UKandNewYork,NY,USA:CambridgeUniversityPress. f. Burnett,R.T.,M.SmithVdoiron,D.Stieb,S.Cakmak,andJ.R.Brook.1999.Effectsof ParticulateandGaseousAirPollutiononCardiorespiratoryHospitalizations.Arch.' Environ.'Health54(2):130.doi: / Burtraw,D.,A.Krupnick,G.Sampson,W.Isaac,J.Chu,andB.Beasley.2012.TheTrueCost ofelectricpower.resourcesforthefuture Byun,D.,andK.L.Schere.2006.ReviewoftheGoverningEquations,Computational Algorithms,andOtherComponentsoftheModelsV3CommunityMultiscaleAir

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33 19 Chapter2 AccountingforClimateandAirQualityDamagesinFutureUSElectricityGeneration Scenarios KristenE.Brown 1,DavenK.Henze 1,JanaB.Milford 1 1 MechanicalEngineeringDepartment,UniversityofColorado,Boulder,CO Abstract Thisstudyanalyzeshowassessingfeesbasedondamagescausedbyairpollution mighttransformuselectricitygeneration.damagesfromlifecycleemissionsare internalizedintheepavmarkalmodelthroughfeespertonofso2,nitrogenoxides(nox), particulatematter,andgreenhousegases(ghg)from2015through2055.electricity production,fueltype,emissionscontrols,andemissionsproducedundervariousfeesare examined.ashiftinfuelsresultsfrom$30/tonco2vequivalentghgfeesorfromcriteria pollutantfeesthatcorrespondtothehigherendoftherangeofpublisheddamage estimates,butnotfromcriteriapollutantfeesbasedonlowormidvrangedamage estimates.withmidvrangecriteriapollutantfeesassessed,so2andnoxemissionsare lowerthanthebusinessasusualcase(52%and10%,respectively),withlargerdifferences inthewesternusthantheeasternus.ghgemissionsarenotsignificantlyimpactedby midvrangecriteriapollutantfeesalone;conversely,withonlyghgfees,noxemissionsare reducedbyupto11%,yetso2emissionsareslightlyhigherthaninthebusinessasusual

34 20 case.therefore,covreductionsofghgandcriteriapollutantemissionsfortheelectricity sectorcanbeenhancedbydeliberatepolicydesign. 2.1Introduction ElectricityproductionintheUSisinfluencedbymanyfactors,butnotall consequencesofelectricitygenerationareconsideredwhenplanningcapacityexpansions. Theemissionofpollutantsfromelectricitygeneratingplantsaffectsbothlocalairquality andglobalclimate.forexamplethenaturalresearchcouncilcommitteeonhealth, Environmental,andOtherExternalCostsandBenefitsofEnergyProductionand Consumptionestimateddamages(themonetaryvalueofadverseeffectsofpollution) associatedwithcriteriapollutants(nox,so2,andparticulatematter(pm))fromelectricity generationintheusin2005at$62billionfromcoalplantsand$740millionfromnatural gasplants(nationalresearchcouncilcommitteeonhealth,environmental,andother ExternalCostsandBenefitsofEnergyProductionandConsumption,2010).Thatdamages owingtoclimateandairqualityarelinkedtocommonsourcescanpotentiallybeexploited; policiestargetinggreenhousegasmitigationmayleadtoreductioninlevelsofconventional airpollutants(rive,2010;burtrawetal.,2003).hereweexaminehowincorporating damagesassociatedwithairqualityandclimateintothecostofelectricitywouldimpact thewayinwhichelectricityisgeneratedintheusandtheamountofassociatedemissions produced. Severalstudieshaveinvestigatedthesourceandvaluesofexternalitiesassociated withelectricitygeneration.burtrawetal.(2012)andtheinteragencyworkinggroupon thesocialcostofcarbon(2010)bothstudiedtheexternalcostofco2emissions.the EuropeanExternE(EuropeanCommission,1995)projectcalculatedexternalcostsof

35 21 energytotheenvironment.thestern(2007)reviewcametotheconclusionthatthe benefitsofactiontoavoidclimatechangeandtherelatedexternalitiesoutweighthecosts. Levyetal.(2009)modeledthedamagesfromcoalfiredpowerplantsintheUSandMuller etal.(2011)estimatedusairpollutiondamagesfromallsectors.severalofthesestudies suggestthatthedamagestheyreportcouldbeappliedasfeesonemissionstointernalize externalities. Incorporatingdamagesintothecostofelectricityisexpectedtoencouragepractices thatreduceexternalities.marketswithassociatedexternalitiesarenotefficientunlessthe damagecostsareinternalizedortheexternalitiesareotherwiseconsideredduringdecision making(longoetal.,2008).accordingtoeconomictheory,themostefficientpoliciesto internalizedamagesaredirectedattheexternality,suchasafeeonemissionsratherthana feeonelectricity.emissionsfeesareexpectedtoloweremissionsrates,reducingnegative effectsonairqualityandinturnonhumanhealthandwelfare.byconsideringpolicies basedondamagesinsteadofanemissionortechnologygoal,eveniffeescauseanincrease inthepriceofelectricity,theoverallsocialwelfarecostrelatedtoelectricitywilldecrease becauseexternalitycostsarelowered. Previousstudieshaveassessedthepotentialimpactsofincorporatingexternalities intoenergysystemsoutsidetheus.themarkal(marketallocation)modelisan economicvoptimizationmodelthatfindstheleastcostwaytosatisfyspecifiedenergy demandsovermultivyeartimehorizons(loulouetal.,2004).nguyen(2008)usedmarkal toexaminetheeffectofinternalizingdamagesinvietnamandfoundthatalthoughthecost ofelectricityproductionincreasedby2.6 /kwh,externalcostsof4.4 /kwhwereavoided sothetruecostofelectricitydecreased.rafajandkypreos(2007)usedmarkalto

36 22 examinetheeffectsofincludingexternalitycostsinthepriceofelectricityontheglobal electricitymix.intheirstudy,electricitydemandwasreduced,adifferentmixofgenerating technologieswasused,andemissionscontroltechnologieswereinstalled.rafajand Kypreos(2007)foundthatwheninternalizingexternalitiesforglobalregions,theincrease inelectricitypriceislargerforregionsrelyingoncoalvbasedtechnology.klaassenand Riahi(2007)performedasimilarstudywithMESSAGEVMACRO,internalizingcriteria pollutantexternalitiesfromtheglobalenergysystem.theysawreducedelectricitydemand anduseoffossilfuelsandincreasedproductionfromrenewablesourcesandconcluded thatinternalizingcriteriapollutantexternalitiescanalsoreduceghgemissions. Whilepreviousstudieshaveexaminedthisapproachforothercountriesorthe globalelectricitysystem,toourknowledge,theimpactofinternalizingestimateddamages onthesuiteoffueltypesandtechnologiesusedtogenerateelectricity,andtheirassociated emissions,hasnotbeenstudiedindetailfortheuselectricitysystem.hereweusethe MARKALenergysystemsmodeltoinvestigatescenariosinwhichdamagesfromcriteria pollutantsandgreenhousegases(ghgs)areaccountedforinlongvtermelectricity generationdecisionsbyapplyingemissionsfeesequaltotheestimateddamages. Significantexternalitiesoccurduetodirectfuelcombustionbypowerplants;weextendthe MARKALmodeltoalsoaccountforthoseoccurringduringupstreamstagesofthe electricityproductionlifecycleincludingresourceextraction,equipmentmanufacturing, andtransportation.theanalysisthusbuildsonpreviousliteraturethatdeterminedthe valueofmarginaldamagesofelectricitygeneration.thestudyconsiderstheinterplayof GHGandcriteriapollutantfeesandexaminesdifferencesinresponsesacrossUSregions withdifferentprevexistingemissionscontrolrequirements.

37 23 2.2Methodology 2.2.1$MARKAL$model$ TheMARKALenergysystemsmodelisusedheretocomparefutureelectricity generationscenarios.markalisusedwiththeusenvironmentalprotectionagency s (EPA)9VregiondatabasethatdescribestheUSenergysystem,includingelectricity, transportation,residential,commercial,andindustrialsectors.themodeldeterminesthe leastcostwaytosatisfyfutureendvusedemandforelectricitywithinspecifiedconstraints (Loulouetal.,2004). Electricitygenerationandconservationtechnologiesareincluded,so demandcanbemetbyusingmoreefficientendvusedevicesorbygeneratingmore electricity $EPA$database$ TheEPAUS9regiondatabase(EPAUS9r_2010_v1.3)(U.S.EPAOfficeofResearch anddevelopment,2010)isusedasabasisforallscenariosconsidered.thedatabase representstheusenergysystemfortheyears2005v2055in5yearincrements.while othersectorsarealsorepresentedinthedatabase,thisstudyfocusesontheelectricity system.thedatabaseincludestheprojecteddemandforelectricityineachofthenine censusregionsintheusaswellasthecurrentlyinstalledgenerationcapacity,bytype,in eachoftheseregions(shayetal.,2008).resourcesandenergyaretradedandtransported betweenregionsthroughmodeledpipelines,transmissionlines,andimportandexport parameters. Thedatabaseincludesseveraltraditionalandadvancedelectricitygeneration technologiesthatareinuseoravailabletoinstall.fueltypesusedincludesolar,wind, hydro,geothermal,municipalsolidwaste,biomass,nuclear,oil,naturalgasandcoal.the

38 24 newgenerationtechnologiesavailableforcoalareintegratedgasificationcombinedcycle (IGCC)andsupercriticalsteam.Naturalgasgenerationmethodsincludecombinedcycle, steam,andcombustionturbine.allcoalandnaturalgastechnologieshavetheoptionof applyingcarboncaptureandstorage(ccs).theexistingcoalsteamplantshavetheoption ofapplyingcontrolsonnox,so2andpm.theso2controlsarefluegasdesulphurization (FGD),andtheoptionalPMcontrolsareacyclone,anelectrostaticprecipitator,orafabric filter.tocontrolnox,theresidualcoalsteamplantscanuselownoxburnerseitheralone orincombinationwitheitherselectivenonvcatalyticreduction(sncr)orselectivecatalytic reduction(scr).residualcontroltechnologiesonexistinggenerationarealsoincludedin themodel.fgd,nox,andpmcontrolsarestandardfornaturalgasandnewcoalvfired powerplants.controlledemissionratesarefromtheinventoryofusgreenhousegas EmissionsandSinks(U.S.EPA,2010),eGRID(E.H.Pechan&Associates,Inc.,2010),and thedocumentationofepamodelingapplications(usepa,2003).afixedlifetimeis specifiedforallmethodsofelectricitygeneration;hurdleratesforthecostofcapitalare appliedtoapproximatebarrierstoinvestinginnewtechnologies(u.s.epaofficeof ResearchandDevelopment,2010). FuelsupplycurvesusedintheEPAdatabasearebasedontheNationalEnergy ModelingSystem(NEMS)outputsusedfortheEnergyInformationAdministration s(eia) AnnualEnergyOutlook(AEO)2010report(U.S.EnergyInformationAdministration,2010). Thecostofelectricityproductioncoversstepsfromfuelextractiontotransportationtoend use.costsincludecapitalequipmentandfinancing,operationandmaintenance,andfuel costs.thecapitalcostforsolardeclinesovertime,butthecapitalcostforwindstays roughlyconsistentthroughoutthetimeperiod.availabilityfactorsforwind(energy

39 25 InformationAdministration,2010)andsolar(GovernmentofCanada,2012)are differentiatedbyregion,season,andtimeofday.thefuelcostsofcoalandnaturalgas increasewithtime.dataonexistingpowerplantsincludingcapacity,lifetime,availability, andoperatingcostscomefromeiaforms860,767,759/906,andform1(energy InformationAdministration).Theestimatedcostandefficiencyfornewelectricity generatingunits(egus)isobtainedfromthe2010aeo(u.s.energyinformation Administration,2010). TheEPAdatabasealsoincludespredictedelectricitydemandforallyearsmodeled. MARKALtreatsdemandbyspecifyinganendusedemandforaservicesuchaslightingand thenprovidingarangeoftechnologiestofulfillthedemand,forexampleaselectionoflight bulbs.thetypes,cost,andefficiencyoftheendusetechnologiesarederivedfromaeo(u.s. EnergyInformationAdministration,2010).Demandforthecommercialsectorisderived fromthenemscommercialsectordemandmoduleoutput(energyinformation Administration,2010).Mostofthedemanddatafortheindustrialsectorcomefromthe ManufacturingEnergyConsumptionSurveydatabase(EnergyInformationAdministration, 2007).DemandintheresidentialsectorisderivedfromAEOTableA4:ResidentialSector KeyIndicatorsandConsumption(U.S.EnergyInformationAdministration,2010). Staterenewableportfoliostandardsreferencedfromthe2010AEO(U.S.Energy InformationAdministration,2010)areaggregatedtothenineregionsinthedatabase,by weightingeachstate srequirementsbytheirportionoftheregion shistoricelectricity generation.therearenoghgregulationsrepresentedinthecurrentdatabase.the databasealsoincludesemissionsconstraintsbasedonexistingorpendingregulations.the CrossStateAirPollutionRule(CSAPR)isrepresentedbyplacinganupperboundonSO2

40 26 andnoxemissionsfromegusintheeasternus.althoughthecsaprhasbeenoverturned (EME'Homer'City'Generation'v.'EPA,2012),thelimitsinthemodelshouldapproximatethe eventualregulationslimitingemissionsfromegus.allemissionsarealsocappedat historicallevelsfromtheusepacleanairmarketsdivision sdatabase(cleanairmarkets DivisionofUSEPA,2012),andlimitedtocomplywiththeCleanAirActAmendments(Shay etal.,2008).existingcoalvfiredegusarealsoconstrainedtouseatleastonenoxcontrol methodin2020andbeyond.whileemissionsareconstrainedtohistoricallevels,the methodofachievingtheselevelsisnotspecified,soutilizationofcontroltechnologiesin themodeldoesnotnecessarilymatchhistoricaluse. ElectricitygenerationemissionsintheEPAMARKALdatabasegenerallyinclude onlydirectcombustionemissions.forthisstudyweaddedemissionsfromotherlifecycle stages.transportationofmaterials,landusechanges,disposalofwornoutmaterials,and electricityuseinequipmentproductionareamongtheemissionssourcesupstreamof generation(america senergyfuturepanelonelectricityfromrenewableresourcesand NationalResearchCouncil,2010).GHG,SO2,NOx,andPM10upstreamemissionsare introducedforallelectricitygeneratingtechnologies.seethesupportinginformationfor upstreamemissionsestimates $Damages$ TheprimaryfeesappliedarebasedonthemarginaldamageestimatesfromHidden CostsofEnergy(NationalResearchCouncilCommitteeonHealth,Environmental,and OtherExternalCostsandBenefitsofEnergyProductionandConsumption,2010), hereinafterreferredtoasnrc2010.thesevaluesconsideremissionsthroughouttheentire US,withdamagesspecifictoEGUemissions.Thecriteriapollutantdamagesareestimated

41 27 innrc2010usingtheairpollutionemissionexperimentsandpolicy(apeep)model (MullerandMendelsohn,2006),accountingforthecontributionofcurrentEGUemissions toambientconcentrationsineachcountyinthecontiguousususingemissionsdatafrom EPA s2002nationalemissioninventory(officeofairqualityplanningandstandards, 2002).Thesecountylevelconcentrationsaremultipliedbythepopulationofeachcounty todetermineexposure.thedamagesarecalculatedbasedontheuspopulationcirca2000 andarenotrecalculatedforpredictionsoffuturepopulation.toestimatehealtheffects, NRC2010comparedtheseexposurelevelstoconcentrationresponsefunctionsfrompeer reviewedhealthstudies(popeetal.,2002;abbeyetal.,1993;burnettetal.,1999).they thenmonetizedtheeffectstodeterminedamageestimates.thevalueofastatisticallife (VSL)usedisapproximately$6million,whichNRC2010applieduniformlytoallliveslost. Thevalueofmarketgoodswasdeterminedbymarketprice,andthevalueofillnesswas derivedfromnonmarketvaluationliterature(chestnutandrowe,1990).tocalculate marginaldamages,nrc2010usedapeeptoestimatetotaldamagesduetoallsourcesin themodel.fromthesebaselineemissions,anadditionaltonofpollutionwasaddedfrom onesourceatatimeandtotaldamageswererecomputed;themarginaldamageisthe difference.thiswasrepeatedforeachpollutantandeachsource.themajorityofthe damagesfromcriteriapollutantsareduetohumanhealtheffects,specificallypremature mortalityassociatedwithchronicexposuretopm2.5(c.a.popeetal.,2002).otherhealth effectsincludechronicbronchitis(abbeyetal.,1993),andrespiratoryandcardiovascular hospitalization(burnettetal.,1999).environmentalexternalitiesincludechangesincrop andtimberyieldsandreducedvisibility(pye,1988;reich,1987;mullerandmendelsohn, 2006;Rawlingsetal.,1990).

42 28 Table2.1.Marginaldamageestimatespresentedintheliterature(valuesconvertedfrom originalunitstoyear2005usd/metrictonpollutant). Source NRC2010 NRC2010 Mullerand Mendelsohn2007 Fannetal.2009 Fuel CoalEGUs Naturalgas Averageforall AverageforEGUs type/ EGUs sources sector SO NOx PM PM10V Table2.1comparestheNRC2010damageestimatestootherrecentvalues publishedintheliterature.thereareafewprimaryreasonsfordiscrepanciesinthe damageestimates.marginaldamageestimatesmaybe50%higherifthevslisapplied uniformly(mulleretal.,2011)asopposedtodifferentiatingbaseduponage(mullerand Mendelsohn,2007).Anotherimportantfactoriswhichsourcesareconsidered.Thestudy bymullerandmendelsohn(2007)consideredallsourcesofemissionswhilenrc2010and Fannetal.(2009)focusedsolelyonEGUs,andNRC2010furtherseparatedcoalandnatural gasunits.variationsinpopulationexposurealsocontributetothedifferencesacross damageestimates.mullerandmendelsohn(2007)considereddamagesinurbanandrural areasseparately,whilefannetal.(2009)onlyconsideredeffectsinurbanareas.since mortalityfrompm2.5isasignificantcomponentofthedamageestimates,thechoiceofthe correspondingconcentrationvresponsefunctionsisalsoimportant.nrc2010andmuller andmendelsohn(2007)usedpopeetal.(2002)andwoodruffetal.(2006)torelatepm2.5 exposuretomortality;fannetal.(2009)usedladenetal.(2006). Thefeesusedfordirectcombustionandupstreamemissionsofgreenhousegases aresetat$30/tonco2vequivalent(co2ve).thisvalueischosentorepresentthecentral

43 29 tendencyofthedamageestimatesintheliterature(nationalresearchcouncilcommittee onhealth,environmental,andotherexternalcostsandbenefitsofenergyproductionand Consumption,2010;Burtrawetal.,2012).Therearelargediscrepanciesintheestimated valueofdamagesfromghg.nrc2010foundthatalmostallvariationderivesfrom differencesinassumptionsofdiscountrateandthemagnitudeofdamagesfromclimate change,especiallywhetherunlikelybutcatastrophiceffectswereconsidered.emissionsof CO2areassumedtodominatethedirectcombustionemissionsofGHG.Forupstream emissions,theghgfeeisalsoappliedtomethaneemissionsfromproductionofnaturalgas andlandfillgas.afactorof21isusedtoconvertmethaneemissionsonamassbasisto CO2Ve. Thedamageestimatesdescribedaboveareinternalizedasfeesonemissions.These feesareappliedintheyears2015through2055.allofthefeesareappliedpermetricton ofpollutantemittedandallvaluesaregiveninyear2005usd.thenrc2010valuesare usedasthemidvrangefeesforcriteriapollutants.distinctfeesareappliedtoemissions fromcoalandnaturalgasfiredpowerplantscorrespondingtotheseparatedamagevalues providedbynrc2010.forupstreamemissionsandbiomasscombustionemissions,the damagespertonarethesameforeachgenerationtypeandaredeterminedbyanaverage ofthecoalandnaturalgascombustiondamageestimatesfromnrc2010.inadditionto examiningtheeffectoffeesbasedonthemidvrangenrc2010estimates,sensitivitycases usemullerandmendelsohn s(2007)valuesaslowerestimatesandfannetal. s(2009) valuesashigherestimates.inthesesensitivitycases,thesamefeesareappliedtoboth combustionandupstreamemissionsregardlessofgenerationtype.inseparatecases,fees areconsideredoncriteriapollutantsonly,ghgemissionsonly,andbothcriteriapollutants

44 30 andghgs.inthecasespresentedhere,feesareappliedtofulllifecycleemissions.wealso examinedtheimpactofonlyapplyingfeestodirectcombustionemissions,withresults showninthesupportinginformation. Duetouncertaintyinthepredictedcostandsupplyofnaturalgas,asensitivity analysiswasruntorepresentthefuelsupplycurvespredictedfornaturalgasinthe2012 AEO,(U.S.EnergyInformationAdministration,2012)whichcorrespondtoincreasedsupply andlowergaspricesthanthe2010aeoforecastusedintheepamarkaldatabase.this modificationismodeledbyaddingasubsidyof$1million/petajoules($1.09/thousand cubicfeet)onnaturalgasinthemarkaldatabaseforallmodelyears,approximatingthe pricedifferencebetweenthe2012and2010aeoprojections. 2.3Results Figure2.1showstheelectricitygenerationbyfueltypeinfourcases:businessas usual(bau)withnofeesadded,lifecyclefeesoncriteriapollutantsbasedonnrc2010 damageestimates,lifecyclefeesonghg,andlifecyclefeesoncriteriapollutantsandghg. IntheBAUcase,theamountofgenerationfromcoalremainsrelativelyconstant,butas totalgenerationincreasesthepercentagefromcoaldeclinesfrom48%in2010to37%in 2055.Naturalgasgenerationincreasessignificantly,withitscontributionincreasingfrom 20%in2010to33%in2055.Withlittlechangeinabsolutegenerationfromnuclear power,itscontributiondropsfrom18%to13%.thesharefromhydropowerdropsfrom 6%to5%.Finally,theabsoluteamountofgenerationfromsolar,geothermal,andwind increasesovertime,withwindplayingthelargestroleandcontributing7%ofgeneration in2055.

45 31 WhenmidVrangefeesareappliedtothecriteriapollutantlifecycleemissions,there areonlyslightchangestothetotalelectricityuseandgenerationmix.moresignificant changesresultwhenonlyghgfeesareapplied.thereisupto7%lesstotalelectricity generatedwithghgfeesinplacecomparedtothebaucase,andupto16%lesselectricity generatedfromcoal.thereisupto9%moregenerationfromnaturalgas,7%morefrom windandupto13%morefromhydro.whenghgfeesandmidvrangecriteriapollutant feesarecombined,limitedadditionalreductionsinelectricitygenerationandcoaluse occur,withupto7%lesstotalelectricityand18%lesselectricityfromcoalthaninthebau case.withthecombinationoffeesthereisyetmoreexpansionofnaturalgasandwinduse, withincreasesofupto10and11%comparedtobau,respectively. Figure2.1.Electricityproductionbyfueltypeinfourcases:BAU,lifecyclecriteriapollutant fees,lifecycleghgfees,andlifecyclecriteriapollutantandlifecycleghgfees. Other includesoil,biomass,waste,andgeothermalgeneration. Figure2.2showsemissionsofSO2andNOxfromeachofthefourmaincases.The emissionsaredividedintothoseoccurringintheeasternandwesternus,asthesetwo regionshaveexistingemissionsregulationsthataredistinctlydifferent.figure2.2also showsresultsfromapplicationofcriteriapollutantfeesbasedonlowandhighdamage

46 32 estimatespresentedas errorbars onthenationaltotalemissionsanddiscussedinthe nextsection.pmchangesaretypicallysmallwhenfeesareappliedtocriteriapollutants, GHGorboth;resultsforPMareshowninthesupportinginformation. IntheBAUcase,emissionscontroltechnologiesareappliedtoEGUsduetoexisting regulations,sothatby2035totalso2andnoxemissionsarerespectively78and27% lowerthanin2005.inthebaucase,themodelappliesfewnewcontrolsonso2until2015, afterwhich65v70%oftheelectricitygenerationfromcoalhasfgdtechnologiesapplied. MostcoalplantshavebothlowNOxburnersandSNCRequipmentinplaceinallyears. ControltechnologiesselectedintheBAUcaseareexpectedtodiffersomewhatfromthose appliedintherealworldduetothemodel ssimplifiedtreatmentofcostsandconstraints. WhenmidVrangefeesareappliedtothecriteriapollutantlifecycleemissions,there areonlyslightchangestotheelectricitymix,asshowninfigure2.1,butthechangesin emissionsaremoresubstantial.thereductioninso2andnoxemissionsisduetoan increaseinthecontroltechnologiesapplied.asshowninfigure2.2,nationwideso2 emissionsare47v53%lowerinthecasewithmidvrangecriteriapollutantfeesthaninthe BAUcase.WithmidVrangecriteriapollutantfees,87%ofcoalplantsacrossthecountry havefgdcontrolsafter2020andeveryplanthasatleastonenoxcontrolandtypically two.so2emissionsinthewesternregionare70%lowerthaninthebaucase,whilethose intheeasternregionare36v42%lower.noxemissionsarereducedbyupto10%overall, andinthewesternregionareasmuchas21%lowerthaninthebaucase.theregional discrepancyinadditionalreductionsoccursbecausemorecontrolswereinstalledinthe easternregionpriortoapplicationoffees.

47 33 Figure2.2.EmissionsofSO2andNOxfromelectricitygenerationineasternandwestern regionsoftheus.theerrorbarsrepresentnationaltotalemissionswithhighandlow sensitivityfeesinplace. WhenfeesareappliedtoGHGemissionsalone,withoutfeesoncriteriapollutants, thenoxemissionsarelowerthaninthebaucaseforallyearsduetoareductionintheuse ofcoaltogenerateelectricity.noxemissionsareasmuchas11%lessthaninthebaucase. AsshowninFigure2.2,theSO2emissionsareactuallyslightlygreaterthanintheBAUcase duetoareductioninthenumberofso2controlsapplied,withadifferenceof6%by2055.

48 34 AddingGHGfeestothemidVrangecriteriapollutantfeesresultsinadditional reductionsincriteriapollutantemissions.noxemissionsarereducedasmuchas14% fromthebaucaseand12%comparedtothecasewithfeesoncriteriapollutantsalone, duetothecombineduseofcontroltechnologiesandareductionincoaluse.so2emissions areasmuchas63%lowerthaninthebaucaseand22%lowerthanthemidvrangecriteria pollutantfeecase.withghgfeescombinedwithcriteriapollutantfees,86%ofgeneration fromcoalgoesthroughfgdemissionscontrolsafter2020.thisisaslightlylower percentagethaninthecasewithonlycriteriapollutantfeesbecausemorereductionsare achievedthroughreducedcoalcombustion. Figure2.3showsGHGemissionsresultsforthefourmaincasesweconsidered.Asin Figure2.2,resultsarealsoshownaserrorbarsforcaseswithcriteriapollutantfeesbased onlowandhighdamageestimates.inthebaucase,ghgemissionsincreaseovertime,but moreslowlythantotalelectricitygenerationastechnologieswithloweremissions contributealargerportionoftheelectricity.whenmidvrangecriteriapollutantfeesare appliedwithoutincludingghgfees,thereisaslightdecreaseofatmost2%inghg emissionsrelativetothelevelsinthebaucase.whenfeesareonlyappliedtoghg emissions,thoseemissionsareasmuchas14%lessthaninthebaucase.themaximum impactofghgfeesonghgemissionsoccursabout20yearsout,anddeclinesinthelater yearsduetoanincreaseinelectricitydemandthatisnotfullysatisfiedusinglowghg intensitygeneration.finally,thecombinationoffeesonghgandmidvrangefeesoncriteria pollutantsleadstoslightlylowerghgemissionsthantheghgfeesalone,withreductions ofupto16%comparedtothebaucase.

49 35 Figure2.3.LifecycleGHGemissions(inCO2Ve)infourdifferentcaseswheretheerrorbars representthetotalemissionswithhighandlowcriteriapollutantfees $Sensitivity$Analysis$ 'High'Damage'Estimates' Oneofthelargestsourcesofuncertaintyintheresultsshownaboveisthevalueof theexternaldamages.toinvestigatehowrobustourfindingsaretothisuncertainty, sensitivitycasesareconsideredusingfeesbasedonhighandlowestimatesofdamages.for SO2andNOx,respectively,thehighcriteriapollutantdamagesshowninTable2.1are approximately13and9timeshigherthanthenrc2010estimatesforcoalvfiredpower plants,and6and6.5timeshigherthanthenrcestimatesforgasvfiredplants.asshownin thesupportinginformation(figure2.4)whencriteriapollutantfeesaresettocorrespond tothesehigherdamageestimates,changestotheelectricitysystemaremuchmore pronouncedthanwithmidvrangecriteriapollutantfees.comparedtothemidvrangefees, highlifecyclecriteriapollutantfeesleadtoasmuchas23%lesselectricitygeneratedfrom coal.thereisupto5%lesstotalelectricitycomparedtothemidvrangefees,andthereisan

50 36 increaseinnaturalgasandwindpowerofupto21%and11%respectively.thusthe electricitymixmaybealteredbycriteriapollutantfeesalone,ifthefeesarehighenough. Moreemissionsreductionsareseenwithhighfeesoncriteriapollutants,including reductionsinghgemissions.thereisupto18%lessco2generatedwithhighfeeson criteriapollutantsthanwiththemidvrangefees(figure2.3).fewerfgdcontrolsare appliedinthiscasethanwiththemidvrangefeesandthescrubbersareimplementedmore slowly,inpartbecausethereductionincoalusealsoreducesemissions.thenoxemissions areasmuchas49%lowerthanwithmidvrangefees,andthereisuptoa54%additional reductioninso2emissions(figure2.2) 'Low'Damage'Estimates' ThelowdamageestimatesgiveninTable2.1forSO2andNOxare,respectively, aboutonevfourthandonevfifthaslargeasthosepresentedinnrc2010forcoalplants. Correspondingly,whenonlythelowcriteriapollutantfeesareappliedthemagnitudeof changestothegeneratingsystemissignificantlysmallerthaninthecasewithmidvrange fees.asshowninthesupportinginformation(figure2.4),thereisverylittlechangefrom thebaucaseintotalelectricitygenerationorthemixofgeneratingtechnologies.asshown infigure2.2,theso2emissionsarenearlythesameasforthebaucaseormorethan doublethoseinthemidvrangefeecase.fgdisinstalledononly67%oftheunitsacrossthe country.withlowfees,noxemissionsareupto8%lowerthaninthebaucase,whereas withmidvrangefeesnoxemissionswerereducedbyupto12%.theghgemissionslevels areclosetothoseforthemedianfeecase 'Low'Natural'Gas'Prices'

51 37 Inthecasesinwhichnaturalgasisgivenasubsidyof$1million/petajoulesto representtheaeo2012(u.s.energyinformationadministration,2012)forecastoflower naturalgasprices,someelectricitygenerationisshiftedfromcoaltonaturalgas,butthe effectonemissionsissmall.withthesubsidy,naturalgasuseisincreasedbyupto5%in thebaucase(withoutfees)andbyupto6%inthecasewithmidvrangefeesappliedto criteriapollutantscomparedtothesamefeeswithoutthesubsidy.thereareslightlylower GHGandSO2emissions(2%and4%respectively)withlownaturalgaspricesandcriteria pollutantfeesduetolesscoalcombustion.inthecasewithoutfees,ghgandso2emissions areabout1%lowerthaninthebaucase.noxemissionsshowverylittlechangewithlow naturalgasprices. 2.4Discussion Theseresultssuggestthatimposingcriteriapollutantfeesatlevelsthatcorrespond tolowtomidvrangedamageestimateswouldhavelittleeffectontotalelectricity production,thegenerationmix,orghgemissions,butwouldsubstantiallyreducecriteria pollutantemissionsthroughimplementationofcontroltechnology.incontrast,criteria pollutantfeesbasedonupperrangedamageestimatesnotonlyreducecriteriapollutant emissionsbutalsoaffecttheamountandmethodofelectricityproductionaswellasghg emissions.whenghgfeesof$30/tonco2veareappliedwithoutcriteriapollutantfees, totalelectricitygeneration,generationfromcoal,andghgandnoxemissionsareall reduced,butnotso2emissions.whenghgfeesarecombinedwithmidvrangecriteria pollutantfees,theelectricityportfolioischangedthemostfromthebaucaseandbothghg andcriteriaemissionsarereducedmorethanintheothercases.

52 38 Themodeldetermineswhichtechnologiestousebasedontherelativepricesofthe availableoptions.inthemarkaldatabase,fgdcontrolsforcoalvfiredpowerplantshave typicalcostveffectivenessof$2,000v4,000/ton.thereforemanycoalplantshavefgd installedwithmidvrangefeesof$6,000/ton,butnotwithlowfeesof$1,500/ton.costv effectivenessestimatesforbothsncrandlowvnoxburnersinthemarkaldatabaseareas lowas$1,100/ton,whichishigherthanthelowfeesfornoxof$370/tonbutcheaperthan themidvrangefeesof$1,700/ton.dependingonconditionsforaparticularegu,cost effectivenessofscrinthedatabasecanbeasmuchas$9,000/ton,whichisstillcheaper thanhighvendnoxfeesat$15,000/ton.similarcomparisonscanbemadebetween generatingtechnologiesiffeesexpressedin$/tonareexpressedin$/mwhforspecific units.asoneexample,markalestimatesthatelectricitygeneratedatacertainexisting coalplantcostsabout$10/mwhwhileanewwindturbinenearbywouldproduce electricitythatcostsabout$70/mwh.withghgandmidvrangecriteriapollutantfees,the coalplantwouldhaveanadditionalcostimposedof$76/mwh. Sometechnologiesthatareavailableinthemodelareneverusedinthecases presentedhere.ccsisanoptionalcontroltechnologybutisnotutilizedbyanyofthe scenariosconsideredhere,astheghgfeeof$30/tonislessthanthecostofccsinthe MARKALdatabase,whichisabout$140/ton.Integratedgasificationcombinedcycleplants arenotusedeither.althoughthefuelisstillinexpensiveandsomeemissions(andfees) couldbeavoided,thecapitalcostofbuildingthesenewplantsistoohighforthemtobe selectedforcapacityexpansion. Whilenaturalgaspriceprojectionsareshiftingrapidly,theresultsofourstudyare nothighlysensitivetotheseforecasts.naturalgasuseincreaseswithtimeinallcasesand

53 39 itsuseincreasesoverthebauscenariowhenhighcriteriapollutantfees,ghgfees,orboth areinplace.reducingtheeffectivepriceofnaturalgasby$1million/petajoulesdoes increasenaturalgasuseanddecreasecoaluse,butthedecreaseinemissionsfromthis changeissmallcomparedtotheimpactoffees.thus,whilelessexpensivenaturalgasmay helptoreduceparticulates,feesarestillneededtominimizeexternalitiesfromelectricity generation. Someoftheresultsshownheresupportkeyconclusionsofpreviousstudiesforthe USandotherareas.Burtrawetal.(2003)foundthatintheUSin2010,aGHGfeewould leadtohealthbenefitsinadditiontotheclimatebenefits,andwithaghgfeeappliedhere, criteriapollutantemissionsarereduced.rive(2010)foundthatmeetingthekyoto protocolineuropereducedtheemissionscontrolsneededtomeetairqualitypolicy targets.hereweseeasimilarresultfortheinteractionofghgandcriteriapollutant emissionsfeesintheus,andtheimpactofinternalizingghgdamagesalonegenerally reducescriteriapollutantsexcludingaslightincreaseinso2emissionsinsomecasesin theirglobalscaleassessment,klaassenandriahi(2007)foundthatapplicationoffeeson criteriapollutantscouldalsoreduceghgemissions.wealsofoundthistobetrueforthe US,buttheGHGemissionsreductionsweresmallexceptwhenthehighestlevelofcriteria pollutantfeeswereapplied.thus,whilethepotentialcovreductionsofghgandcriteria pollutantemissionsareevident,maximizingsuchbenefitsmayrequirejudiciousdesignof emissionscontrolstrategies. Furtherworkiswarrantedtoreconcileandrefinedamageestimatesforcriteria pollutantsaswellasgreenhousegasesparticularlygiventherangeofvaluespresentedin theliterature.damagevbasedfeescouldalsobemodifiedforfutureyearsbasedon

54 40 populationgrowthprojections,orvariedregionallytoreflectdifferencesindamage estimates.infuturework,themodelcouldalsoberefinedtoincludeopportunitiesto directlyreduceupstreamemissionsthroughcontrolsorchangesinproductionmethodsat upstreamstages.inthisstudy,upstreamemissionswereonlymodifiedthroughshiftsat theelectricitygenerationstage.finally,theversionofmarkalusedheremodelsinvelastic endvusedemand,sothatallreductioninelectricitydemandcomesfrommoreefficientendv usedevices.futureworkwithafullyelasticmodelwouldbeneededtoassesshowendvuse demandmightchangeiffeesincreasethepriceofelectricity. 2.5Acknowledgements WewouldliketothanktheEPAfortheuseoftheEPAUS9regionMARKAL databaseversionepaus9r_2010_v1.3_052112_ucb.theresultsandanalysispresented herewerederivedindependentofepainput.wewouldalsoliketothanknicholasflores andgarvinheathfortheirhelpfulcommentsduringearlystagesanddanloughlinforhis assistanceinusingthemarkalmodel.thisresearchwassupportedbyauniversityof ColoradoseedgrantfromtheRenewableandSustainableEnergyInstituteandtheNASA AppliedSciencesProgramNNX11AI54G. 2.6SupplementalInformation 2.6.1$Electricity$Portfolio$and$Emissions$in$Additional$Cases$ Figures2.4V2.9belowshowtheelectricityandemissionsgeneratedundervarious assumptionsinmarkalintheyear2035.thoughnotshownhere,thetrendacrossyears issimilarforallcaseswithemissionsandgenerationdecreasingoncethefeesareapplied, butincreasingagainasthedemandincreasesduetopopulationgrowth.thisvariationcan

55 41 beseeninfigures2.1v2.3inthetext.theyear2035isshownherebecauseitrepresentsa highlevelofvariabilitybetweenthecasessinceearlieryearshavenotfullyadjustedtothe feesandlateryearsbecomemoreconstrainedbythedemand.figure2.4showsthe electricitygeneratedbyeachfueltypeinthecasesrun.highcriteriapollutantfeesandghg feeshavearelativelylargeeffectontheamountofelectricitygeneratedandhowthe electricityisgenerated.caseswithmidvrangeandlowcriteriapollutantfeelevelshavea generationprofilesimilartothebaucase.theinfluenceofreducednaturalgaspricesis relativelysmall. AsshowninFigure2.5,SO2emissionsexhibitasharpresponsetomidVrangeand highcriteriapollutantfees.aloneorincombinationwithghgfees,theyreduceso2 emissionsby50%ormore,duetotheapplicationofcontrols.thisisbecausethecontrol technologiesforso2areinexpensivecomparedtothefeelevel.sincethecontrol technologiesonlyreducecombustionemissionsinthecurrentmodel,upstreamemissions areonlychangedincaseswherethefuelusedtogenerateelectricitychanges.upstream emissionsarediscussedfurtherinthenextsection.asshowninfigure2.7,thenox emissionsresponseissmallerforlowormidvrangefees,butthereareloweremissionsin thesecasesduetoanincreaseincontroltechnologyandadecreaseincombustion.with highfeesonnoxthereareevenmorestringentcontrolsused,whichfurtherreducesthe emissions.thehigherfeeisrequiredforfurthernoxreductionsbecausenoxcontrols beyondthoseexistingarerelativelyexpensivecomparedtothemidtolowfees.the upstreamnoxemissionsshowlittlechangebecauseinthemodeltheycannotbereduced bytheapplicationofcontroltechnologies.asseeninfigure2.8,ghgemissionsarereduced eitherwithghgfeesorwithhighvlevelfeesoncriteriapollutants.thesefeesdonotresult

56 42 indirectapplicationofco2controls(i.e.,carboncaptureandsequestration),whichis estimatedinmarkaltoberelativelyexpensive.however,ghgfeesorhighvlevelcriteria pollutantfeesarehighenoughtostimulatesomechangesinfueluse,whichreduceghg emissions.itcanbeseeninthefigurethatthemajorityoftheghgemissionsarefrom combustion,especiallysincenoccsisusedtoreducethosecombustionemissionsinthese cases. Figure2.4.Electricitygeneratedbyfueltypein2035forthecasesrun.The other category includesoil,biomass,msw,andgeothermal.

57 43 Figure2.5.SO2emissionsgeneratedduetoelectricityproductionin2035acrosscases. Figure2.6.NOxemissionsgeneratedduetoelectricityproductionin2035acrosscases.

58 44 Figure2.7.GHGemissionsproducedduetoelectricitygenerationin2035acrosscases. Emissionsofprimaryparticulatematter(PM)arelessresponsivetofeescompared tootheremissions(seefigure2.9).asforghgemissions,reductionsinpmemissionsare mostlyduetochangesinfuelsasopposedtotheuseofadditionalcontroltechnologies.the combustionpmemissionsinthemodelarealreadycontrolledinallcasesincludingthe BAU,andwhileadditionalcontrolsareavailabletheyaremoreexpensivethanthefeeon PM.SincethecontrolledPMemissionsarealreadyrelativelylow,thechangesinPM emissionsaredrivenbythefuelchangesduetofeesonotheremissions.whenmidvrange orlowcriteriapollutantfeesareappliedtocriteriapollutantlifecycleemissions,pm10 emissionsareverysimilartothebaucase.whenfeesareappliedtoghgemissions(alone orincombinationwithcriteriapollutantfees),pm10emissionsarelowerthanthebau case.thereductioninthiscaseisduetotheshiftawayfromcombustiontechnologiesto

59 45 reduceghgemissions.withhighfeesoncriteriapollutants,pm10emissionsarelowerthan thebauandmidvrangefeecases. Figure2.9showsthatthemajorityofthePM10isemittedupstream.Thevaluesfor theupstreamcoalpmemissionsarehighlyuncertainbecauseestimatescomeprimarily fromasinglestudypublishedin1999(spathetal.,1999).thisstudyfoundthatpm emissionsaredominatedbylimestonequarryingforuseincoalminingandsulfurcontrols. ThedataavailableforlifecyclePMemissionsforallgenerationtypesislimited,therefore thetopicoflifecyclepmemissionsforelectricitygenerationwarrantsfurtherstudy. Figure2.8.PM10emissionsproducedduetoelectricitygenerationin2035acrosscases.

60 $Life$Cycle$Emissions$and$the$Effect$of$Incorporating$Upstream$Fees$ Inordertoconsidertheeffectsofincorporatingfeesonlifecycleemissions,notjust directfuelcombustionemissions,emissionsvaluesrepresentingtheupstreamemissionsof GHG,NOx,PM10,andSO2fordifferentelectricitygeneratingtechnologiesareaddedtothe MARKALdatabase.Theelectricitygeneratingtechnologiesconsideredarebiopower, geothermal,hydropower,wind,nuclear,naturalgas,coal,municipalsolidwaste(msw), landfillgas(lfg),photovoltaic(pv),concentratedsolarthermalpower(csp),fueloil,and dieseloil. Theupstreamemissionsareaddedbycreatingnewemissiontypes(separatefrom combustionemissions)foreachtypeofelectricitygenerationnamedco2eu,noxeu, PM10EU,andSO2EU.Forcombustionbasedgeneration,theupstreamemissionsaregiven intermsofheatinputofthefueltypewherepossiblesincetheupstreamemissionsoccur basedontheamountoffuelused.inthesecasesthenewemissionsareaddedintermsof kt/pjheatinput.forgenerationtypesthatdonotrelyoncombustion,thenewemissions areaddedintermsofkt/pjelectricity. Whensuchvaluesareavailable,theupstreamemissionsaregatheredfromsources thatestimatedtheupstreamemissionsseparatelyaspartofalifecycleanalysis.those upstreamemissionvaluesarepresentedintable2.2,asaddedtothemarkaldatabase.

61 47 Table2.2UpstreamEmissionsinkt/PJ Fuel/generation type PJinterms of Coal Heatinput Concentrated solarpower (CSP) GHG NOx PM10 SO2 NA Electricity Diesel Heatinput Fueloil Heatinput Geothermal Electricity Hydropower Electricity LandfillgasICE Heatinput 283 NA NA NA Landfillgas Heatinput 213 NA NA NA turbines Naturalgas Heatinput NA Nuclear Electricity Photovoltaic Electricity Windpower Electricity Forthefollowingemissions,theupstreamemissionsvaluesweredeterminedby subtractingthecombustionemissionsintheepamarkaldatabasefromtheestimateof thelifecycleemissionsintheliterature.table2.3presentstheentirelifecycleemissions forthosetechnologies. Table2.3.Lifecycleemissionsinkt/PJ(heatinput) Fueltype GHG NOx PM10 SO2 Biomass Coal Seetable2.2 Seetable Seetable2.2 NG Seetable2.2 Seetable Seetable2.2 Moreinformationonspecificsourcesofemissionsestimatesisgivenbelow includingthereferencefromwhichthedatawastaken.datasourceswerechosenthat 1 NA = data not available

62 48 providedvaluesforeachofthefourpollutants.wherepossibleweselectedsourcesthat separatecombustionemissionsfromotherlifecycleemissionsandusedestimatesspecific totheus.thesourcesfromwhichtheupstreamemissionvaluesweretakenarelisted below,aswellasanyemissionsspecifictothatgenerationtype.landfillgasandnaturalgas GHGemissionsincludemethane,notjustCO2;theupstreamCO2emissionsparameter CO2EUisusedtorepresentallupstreamGHGemissionsinCO2Ve. Biomass:NOxandSO2upstreamemissionscomefromMannandSpath(1997) whileco2 andpmlifecycleemissionsarefromthenationalresearchcouncil(2010).forbiomass, thecombustionemissionsofco2donothavefeesappliedbecauseinalifecycleanalysis thegrowthandcombustionofbiomassshouldhavenetzeroco2emissions.thereare someco2emissionsfromotherprocessesassociatedwithbiopowerandthesearetreated intheupstreamemissions.theco2emissionsfrombiomassareaffectedbythefeedstock used,whetheritiswasteresiduesorcultivatedasanenergycrop,andhowthefeedstockis grownandharvested.landusechangeisnotconsideredinthisestimate. Coal:SeparateupstreamPMemissionsarenotavailablesothePMvaluesintable2.3 representwholelifecyclepm10fromtheaverageforthevaluesreportedbythenational ResearchCouncil(2010).Togetupstreamvalues,thecombustionemissionsinMARKAL aresubtractedfromthelifecycleemissions.duetothiscalculationmethodandthelimited numberofpmestimatesintheliterature,thereisahighlevelofuncertaintyinthe upstreampmestimateshere.thepmupstreamestimatesarederivedinpartfroma1999 studythatdoesnotdistinguishpmbysizesothisvaluemaybeanoverestimateoftotal PM10emissions.AllothervaluesrepresentonlyupstreamemissionsfromJaramilloetal. (2011).TheNRELharmonizationstudy(Whitakeretal.,2012)alsopublishedareporton

63 49 coal.thelifecyclecoalvaluesreportedintheharmonizationstudyhaveamedianof1001g CO2Ve/kWhelectricityandthefulllifecycleemissionsconsideredhereareabout342g CO2/kWhheatinput.Assuminga30%or40%efficiencythelifecycleemissionswouldbe 1140or855gCO2Ve/kWhrespectively,whichisvalidatedbytheharmonizationvalues. CSP:UpstreamemissionsvaluesaretakenfromtheNEEDSstudy(NewEnergy ExternalitiesDevelopmentforSustainability,2008),whichconsidersacurrenttrough systemwithsaltastheworkingfluidandonlyusingsolarpowertogenerateelectricityat theplant.thesolarthermalharmonizationstudyfromnrel(burkhardtetal.,2012) providesamedianvalueof26gco2ve/kwhandthisstudyhasavalueof19gco2ve/kwh. Thisiswithintheinterquartilerangereportedintheharmonizationstudy. FueloilandDieselOil:SantoyoVCastelazoetal.(2011)providelifecycleemissionsfor thesefuels.sincethecombustiondamagesarenotseparatelyconsideredinthemodelfor thesetechnologies,theupstreamemissionsaddedtothedatabaseconsidertheentirelife cycle.theso2emissionsmainlycomefromthecombustionofsulfurvcontainingfuels. ProductionofthefuelscontributestoCO2duetogasflaringduringextractionand combustionofthefuelsalsocreatesghgemissions.particulatesandnoxaregeneratedin combustion. Geothermal:TheupstreamemissionsforgeothermalaretakenfromSantoyoVCastelazoet al.(2011)becausethisreportpresentsallthedesiredvalues.theco2andso2values presentedinthisreportarewithintherangeofvaluesconsideredinfricketal.(2010) Therecanbedifferencesinlifecycleemissionsvaluesbasedoneachspecificsite,which canalterthelevelofemissionscreatedwhileconstructingthebelowvgroundportionofthe plant,whichisthelargestcontributortothelifecycleimpacts.(fricketal.,2010)the

64 50 valuesfromsantoyovcastelazoetal.(2011)areusedhereforallgeothermalplants,butin practice,theemissionsmeasuredshouldbeconsideredseparatelyforeachplantbefore levyingafee,duetothegeologicdifferencesthatcanaffectemissionslevels. Hydropower:TheaveragevaluesoftheupstreamemissionsfromNationalResearch Council(2010) areused.intheirassessment,thelargestsourceofghgemissionsfrom hydropowerisfromthefloodingofbiomassduringinitialhydropowerdevelopment.more studiesareneededtobetterunderstandthisimpact. LandfillGas(LFG):LFGlifecycleemissionsarealreadyconsideredintheEPAMARKAL database.theupstreamcriteriapollutantemissionsforlfgcriteriapollutantsareset equaltothevaluesalreadyinthedatabase.co2istreatedasco2vequivalentforlfgto accountforthehighlevelsofmethaneemissionsfromthistechnology.theghgemissions fromlfgarefromkaplanetal.(2009)theghgemissionsarehighforlfgtechnologies becauselandfillsareamajorsourceofch4emissionsandtheemissionscontinueforalong periodoftimeincontrasttowastetoenergywheretheemissionsareinstantaneous (Kaplanetal.,2009). MunicipalSolidWaste(MSW):TheEPAMARKALdatabasealreadyconsidersMSW emissionsoverthewholelifecycle.theupstreamemissiontypesformswaresetequalto theemissionlevelsinmarkal.theemissionfeesforthistechnologyaretheupstream emissionfeessettothetotallifecycleemissionsofthistechnology. NaturalGas:ThePMvaluesaretakenfromtheaverageofthewholelifecyclePM emissionsfromthenationalresearchcouncil(2010).thecombustionpmvaluesfromthe EPAMARKALdatabasearethensubtractedfromthelifecycleemissionstogivethe

65 51 upstreampmemissionsthatareaddedtothedatabase.allothervaluesrepresent upstreamemissionsonlyandcomefromjaramilloetal.(2011). Nuclear:TheaveragevaluesoftheupstreamemissionsfromNationalResearchCouncil (2010) areused.forghgsthisvalueis30gco2e/kwhwhichishigherthanthemedian valueof12gco2e/kwhgiveninthenrelharmonizationstudy(warnerandheath,2012), butwellbelowthehighestimateinthatstudywhichwas110gco2e/kwh,sothisvalueis reasonablecomparedtoothervaluesintheliterature. PV:TheaveragevaluesoftheupstreamemissionsfromNationalResearchCouncil(2010) areusedwhicharewithintherangeofvaluesforpvgiveninthenrelharmonization study(kimetal.,2012),butonthehighendofthevalues.sincetheharmonization assumedsolarirradiancetypicalofthesouthwest,thehighervalueofco2/kwhusedhere makessense.theemissionsvaluesaredependentontheconversionefficienciesofthe panels,theenergymixandintensityusedduringmanufacturing,andalsothesolar insolationatthesiteofinstallation. Wind:TheaveragevaluesoftheupstreamemissionsfromNationalResearchCouncil (2010) areused.thisvalueisalsojustifiedinthenrelharmonizationstudy(dolanand Heath,2012)wherethemedianGHGemissionestimateis11gCO2Ve/kWh,whichforthis studyis10gco2ve/kwh.factorsaffectinglifecycleco2veemissionsforwindincludewind speedandgenerationcapacity TheEffectofLifeCycleVersusCombustionFees Itisimportanttoconsiderthefulllifecycleeffectswhencomparingtechnologies, becausewhileasinglestageofthelifecyclemaydominatetheemissionsforone technology(forexamplethecombustionofcoal)othertechnologiesmayhaveemissionsat

66 52 otherpointsinthelifecyclethatcouldhaveeffectsonhumanhealthandwelfare.inthis studycaseswererunconsideringjustcombustionemissionsfeesaswellasfulllifecycle emissionsfees.theoverallconclusionsholdwhetherlifecycleorcombustionfeesare considered,thatemissionsfeesleadtoareductioninemissions,andghgandhighcriteria pollutantfeescausesignificantdifferencesintheelectricitymixtocontributetothose reductions.therearesomedifferencesintheresultswhenusingcombustionvonlyfees.the maindifferencesoccurfortechnologieswithupstreamemissionsthatarerelativelyhigh comparedtotheircombustionemissions,whichmostlyconcernsrenewableelectricity generationmethods. Renewableelectricitygenerationchangesdifferentlywhenfeesareappliedtolife cycleemissionsthanwhenappliedtocombustionemissionsalone.renewabletechnologies suchasgeothermalthatseeminexpensivewithcombustiononlyfeesarerelativelymore expensivewhenlifecyclefeesareinplacebecausetheyhavehighupstreamfeescompared totheircombustionemissions.whenonlycombustionfeesareinplace,upstream emissionsmayincreaseduetotheincreaseduseoftechnologieswithhigherlifecycle emissions.whenupstreamfeesarealsoapplied,technologiessuchaswindwithlow emissionsacrosstheentirelifecycleareusedandtheupstreamemissionsarelowerthan thebauandcombustionfeecases.itcanbeseeninfigure2.10thattheoverallfueluseis similarwhenthesamefeeisappliedtocombustionorlifecycleemissions,butasshownin figure2.11therenewableportfoliochanges.thecasesshownrepresentnofees,feeson criteriapollutantsonly,feesonghgsonly,andfeesonbothcriteriapollutantsandghgs. Thechangeismostobviouswhenlookingatthedifferenceinwindandgeothermal

67 53 electricitygenerationbetweentwocaseswherethesamefeeisappliedtothecombustion orfulllifecycleemissions. Figure2.9FuelUsein2035forcaseswithfeesoncombustionandlifecyclefees.

68 54 Figure2.10Detailoffuelusein2035forcaseswithfeesoncombustionemissionsandlife cycleemissionfees. Theemissionsarealsodifferentinthesedifferentcases.Withcriteriacombustion fees,noxcombustionemissionsarereducedbyupto17%comparedtothe16%reduction withlifecyclefees,buttheupstreamemissionsareupto3%greaterthaninthebaucase withcombustionfeesandupto3%lesswithlifecyclefees.thetotalnoxemissionsare alsoupto1%higherthanthebaucasewithcriteriacombustiononlyfees.so2combustion emissionsareupto62%lowerthaninthebaucasewithlifecyclefeesandupto60% lowerwithcriteriacombustionfees,buttheupstreamemissionsare20%lowerwithlife cyclefeesandupto12%higherwithcombustiononlyfees.overallso2emissionsarelower thanthebaucaseforbothcases.forthecombinedfeecases,theconclusionsaresimilar, butthereductionsarehigher.forbothcombustionandlifecycleghgfees,thecombustion GHGemissionsareupto14%lowerthanintheBAUcase,buttheupstreamGHGemissions

69 55 areupto6%lessthanthebaucasewithcombustionfeesandupto9%lesswithlifecycle fees. Figure2.11NOxemissionsin2035incaseswithfeesappliedtocombustionandlifecycle emissions. Figure2.12SO2emissionsin2035incaseswithfeesappliedtocombustionandlifecycle emissions.

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75 61 Chapter3 HowAccountingforClimateandHealthImpactsofEnergyUseCouldChangetheUS EnergySystem KristenE.Brown 1,DavenK.Henze 1,JanaB.Milford 1 1 MechanicalEngineeringDepartment,UniversityofColorado,Boulder,CO Abstract Thisstudyaimstodeterminehowincorporatingdamagesintoenergycostswould impactenergyuseintheus.damagesfromhealthimpactingpollutantsorhips(nox,so2, particulatematterpm,ando3)aswellasgreenhousegases(ghgs)areaccountedforby applyingemissionsfeesequaltotheestimatedexternaldamagesassociatedwithlifecycle emissions.wedeterminethatinaleastvcostframework,feesreduceemissions,including thosenottargetedbythefees.emissionsreductionsareachievedthroughtheuseof controltechnologies,energyefficiency,andshiftingthefuelsandtechnologiesusedin energyconversion.theemissionstargetedbyfeestypicallydecrease,andlargerfeeslead tolargerreductions.comparedtothebasecasewithnofees,in2045,so2emissionsare reducedupto70%,noxemissionsupto30%,pm2.5upto45%,andco2byasmuchas 36%.Emissionsofsomepollutants,particularlyVOCsandmethane,sometimesincrease whenfeesareappliedcomparedtothecasewithoutfees.thecovbenefitofreductionin nonvtargetedpollutantsisnotalwayslargerforlargerfees,ashipsarereducedlesswith thelargestghgfeesthantwooftheotherghgfeecasesconsidered.noxemissionsare reducedby8%withthelargestghgfees,but13%withthesecondlargest.thedegreeof

76 62 covreducedemissionsisdependentonthetechnologypathwayusedtoachieveemissions reductions,includingthemixofenergyefficiency,fuelswitching,andemissionscontrol technologies. 3.1Introduction Theemissionofpollutantsassociatedwithenergyproductionandusehaseffectson bothlocalairqualityandglobalclimate.forexample,thehealthrelateddamagesfrom electricitygenerationintheusin2005havebeenestimatedatover$62billion(national ResearchCouncilCommitteeonHealth,Environmental,andOtherExternalCostsand BenefitsofEnergyProductionandConsumption,2010).Greenhousegas(GHG)related damagesfromelectricitygenerationin2005were$118billionifcalculatedwiththesocial costofcarbon(interagencyworkinggrouponsocialcostofcarbon,2013)fortheyear 2010witha2.5%discountrate.Thedirecthealthimpactsofairpollutionincludeeffects suchasprematuremortality(krewskietal.,2009)andasthmaexacerbation(maretal, 2004).Globalclimatechangehaseffectsontemperatureandweatherpatterns(Kirtmanet al.,2013),withconsequencessuchaslossofcropsandanincreaseintheprevalenceof diseases. Theseconsequencescanbeviewedasexternalities,i.e.,effectsonthewellVbeingof anunrelatedgrouporindividualoutsidethemarketmechanismthatcontrolsthepriceof energy.damagesarethemonetaryvalueofexternalities,suchasthevalueofmedicalbills fromadversehealtheffectsresultingfromexposuretoairpollution.incorporating damagesintothecostofenergywouldencouragepracticesthatreducetheexternalities. Themostefficientpoliciestoaddressexternalitiesarethosethataredirectedatthe

77 63 externalityitself,suchasafeeonemissionsratherthanafeeonelectricity.thisallowsthe policytomosteffectivelyreducetheexternalityinsteadofreducingthesurrogate.by consideringfeesbasedondamagesinsteadofanemissionortechnologygoal,eveniffees causeanincreaseinthepriceofelectricity,theoverallsocialcostrelatedtoelectricitywill decreasebecauseexternalcostsarelowered. Guidedbythesegeneraleconomicprinciples,severalpreviousworkshaveexplored howenergysystemsmightdevelopinresponsetoapplicationoffeestointernalizeexternal damages.thesestudies(klaassenandriahi,2007;nguyen,2008;pietrapertosaetal., 2009;RafajandKypreos,2007)haveusedintegratedenergysystemmodelstomake predictionsofchangestotheirenergyusageandproductioniffeesareapplied.these papersfoundthatinternalizingexternalitiesmightreduceenergyconsumption,changethe typesofgenerationtechnologies,andincreasetheuseofcontroltechnologies.theyalso foundthatemissionsofunvtaxedpollutantsaresometimesreducedaswell.aprevious analysis(brownetal.,2013)focusedoninternalizingdamagecostsintheelectricsectorin theus,butdidnotconsiderhowthesystemwouldrespondtofeesimplementedacrossall energysectors.applyingfeesmorebroadlycouldyieldgreateremissionsreductionsand healthbenefits,orallowformorecosteffectiveemissionsreductions.thiswillalsoensure thatreducedemissionsintheelectricsectorarenotoutweighedbyincreasedemissions elsewhere. Thedualimpactsofairpollutiononhumanhealthandclimate,anddifferences betweentheregulatoryframeworksdesignedtoaddresshealthimpactingpollutants(hip) versusgreenhousegases(ghgs),raisesquestionsregardinghowfeesonemissionsofone setofspeciesmayimpacttheother.differentpathwaystoemissionsreductionscanhave

78 64 differentcovbenefitsorevenregionaldisbenefits,asshownbydriscolletal.(2015)intheir analysisofcleanpowerplanscenariostargetingghgreductionfromelectricitygeneration intheus.carbonpoliciesthatallowreductionsfrommultiplesectorshavebeenestimated toachievelargercovbenefitsandreducethecostofcompliance(saarietal.,2015; Thompsonetal.,2014).Otherstudies(Chenetal.,2013;ZapataandMuller,2013;Kleeman etal.,2013;nametal.,2013)haveevaluatedhowairqualityandclimategoalsmightbe metsymbiotically.thesestudiesfoundthatenergyefficiencyandfuelswitchingmeasures usuallyleadtocovbenefits.ontheotherhand,leinertetal.(2013)foundthatireland mightactuallyseemorenox'emissionswhenreducingghgemissionsthantheywould underabauscenarioduetoashiftfromgasolinetodieselvehicles. Inthispaper,weevaluatehowincorporatingexternaldamagecostsintothecostof energycouldchangeenergyuseandemissionsintheus.arangeofdamageestimatesfrom theliteratureisusedtoconstructvariouspolicyscenarios,allofwhichprescribeasetof damagevbasedemissionfeesassociatedwithemissionsofghgsandhips.amodified versionoftheepaus9regionmarkal(marketallocation)modelisusedtoevaluate changestotheusenergysystemthroughtheyear2055underthesepolicies.this frameworkisappliedtoevaluatehowemissionsreductionsfromtheenergysectormight beachievedintheusbyconsideringdifferentmethodsofreductionsuchascontrol technologies,changingfuelsorconversiontechnologies,andimprovedefficiency.further, wecomparetheemissionsreductionspossiblewithfeesdirectedathipsandghgsalone andsimultaneouslydirectedatboth.weexaminecovreductionsandincreasesinnonv targetedpollutantsaswellasreductionsintargetedpollutants.ourfeestructureand modelingsystemarespecifictotheenergysystem(extendingfromfuelextractionthrough

79 65 processing,energyconversion,andenduse);wehencedonotconsiderpossibleemissions reductionpathwaysinothereconomicsectorssuchasagriculture,wastedisposal,ormost industrialprocesses.mostanthropogenicemissionsintheusareassociatedwithenergy production,conversion,oruseincluding83%ofanthropogenicghgemissions(usepa, 2016),95%ofanthropogenicNOxemissions,60%ofVOCemissions,48%ofprimaryPM2.5 emissions,and91%ofso2emissions(officeofairqualityplanningandstandards,2015); therefore,althoughwerestrictouranalysistotheenergysector,wecapturethemajorityof anthropogenicemissions. 3.2Methods 3.2.1$Health$Related$Damages$ TheHIPemissionsconsideredhereareNOx,PM2.5,PM10,SO2andvolatileorganic compounds(vocs).althoughhazardousairpollutants(haps)canalsocausehealth impacts,wedonotconsiderthesehere.threesetsofsectorvspecific,damagevbasedfees areusedinthispaper,shownintable3.1.damagevaluesforpollutantsshouldbelocation dependentbecauseemissionsthatarelocatednearpopulationcenterswilloftenaffect morepeoplethanemissionslocatedinruralareas.althoughdamagesarenotvariedby locationinthisstudy,thelocationdependenceiscapturedbyusingdifferentdamage valuesfordifferentsectors,forinstanceindustrialemissionstendtobecloserto populationcentersthanelectricitygenerationemissions,thereforeindustrialdamagestend tobehigherthanelectricsectordamagespertonofemission.

80 66 Table3.1.Healthimpactingpollutantdamagesusedasfees.(Allvaluesin$/tunless otherwisespecified.)theasterisk(*)representsvaluesthatweretakenfromadifferent literaturesourcethantherestofthatsetoffees,seesourcesintext. Wedesignedthethreesetsoffeesusedhereafterreviewingtheliteratureand choosingvaluesthatcapturethelowvend,highvend,andmidvrangelevelofvaluesreported. ThelowsectorVspecificfeesarederivedfromMulleretal.(2011).ThemidVrangefeesare fromnationalresearchcouncil(2010)hereaftercallednrc2010,exceptthatthemidv rangevocfeeisbasedonthegeometricmeanofthevocdamagesfrommullerand Mendelsohn(2007)andFannetal.(2009).ThehighfeesarebasedondamagesfromFann etal.(2012)exceptthatthevocdamagesfromthehighfeecasearebasedonfannetal. (2009).TheVOCdamageestimatesdoconsiderVOCasaprecursortoPM2.5.ThePM10 valuesinthehighfeecasearebasedonthenrc2010valuesmultipliedbyafactor representingtheaverageincreaseoffannetal.(2012)overnrc2010.theseadjustments weremadesothatthesamesetofpollutantshasfeesappliedinallcases.damagesforthe residentialandcommercialsectorsaresometimesonlyappliedasfeestonaturalgasused

81 67 inthesesectors.thisisbecausefewerstudiesanalyzeddamagesforthesesectorsandthey areoftenreportedintermsofnaturalgasuseinsteadoftonsofemissions.whenemissions specificvalueswereavailable,theywereused.mostenergyuseinthesesectorsis electricityornaturalgas,soweassumethattheseestimatescapturemostofthedamages. ThedamagesinTable3.1inthenaturalgasusecolumnarederivedfromNRC2010by multiplyingbyaratioasdescribedaboveformpm10. Thereareafewreasonsfordiscrepanciesindamageestimatesfromprevious studies,mostlyrelatedtodifferencesinassumptionswhencalculatingthedamages. WhetherornotageistakenintoaccountwhenapplyingtheValueofStatisticalLife(VSL) tomortalitieshasalargeeffectonthedamagevalue.usingauniformvslcanproduce50% highermarginaldamagesthandifferentiatingbyage(mulleretal.,2011).onlymulleretal. (2011)differentiateVSLbasedonage.Anotherfactorthatcancausedifferencesinthe calculatedmarginalvaluesiswhatsourcesareconsidered.thestudiesbymulleretal. (2011)andFannetal.(2012)considerallsourcesofemissionswhileNRC2010focuseson EGUscombustingcoalandnaturalgas.Variationsinpopulationexposurealsocontributeto differencesamongdamageestimates,sotheareasconsideredineachstudyhaveaneffect aswell.sincemortalityfrompm2.5isasignificantcomponentofthedamageestimates,the choiceofthecorrespondingconcentrationvresponsefunctionsisalsoimportant.nrc2010 andmulleretal.(2011)usedresultsfrompopeetal.(2002)andwoodruffetal.(2006)to relatepm2.5exposuretomortality;fannetal.(2012)usedthehealthimpactfunctionsfrom Krewskietal.(2009).FraasandLutter(2013)discussedtheuncertaintiesunderlyingthe publisheddamageestimates,andfoundthattheuncertaintyintheconcentrationvresponse functionsmaybelargerthanthatencompassedbytherangeofstudiesconsideredhere,

82 68 Buonocoreetal.(2014)analyzedthevariabilityofdamageestimatesbetweenindividual facilities;suchspatialvariabilityofmarginaldamagesisimportantforevaluatingthe benefitsofalternativeenergytechnologies(e.g.,silervevansetal.,2013).althoughwedo nothavetheabilitytoincorporatethislevelofvariabilityintoourmodelingframework, thisispartiallyaccountedforinourworkbyusingsectorspecificdamagesandhavinga multivregionmodel.inthispaperweassumethatlocationdifferenceiscapturedby applyingfeesbasedonthesectorfromwhichtheemissionsareproduced $GHG$related$damages$ ThegreenhousegasdamagesusedinthisstudyaretakenfromtheSocialCostof Carbon(SCC)estimatesdevelopedforuseinregulatoryimpactanalysisbytheUS government(interagencyworkinggrouponsocialcostofcarbon,2013).thescc documentationrecommendsconsideringthefullrangeofvaluestheyreportbecausethere aremanyuncertaintiesinvolved.wehaveconsideredallfoursetsofvalues,whichincrease withtimeandarereportedintheappendix(table3.3).feesareappliedtoco2andch4. TheSCCvaluesareadjustedforCH4usingthe100yearglobalwarmingpotential(GWP)of 28(Myhreetal.,2013).Threeofthesetsoffeesaredeterminedbyaveragingtheresultsof severalmodelsconsideringdifferentdiscountrates:5%,3%and2.5%.thefourthsetof feesrepresentsthe95 th percentileoftheensembleofestimatesforthe3%discountrate. Somestudieshavefounddamageestimateslargerthanthoseusedhere.Mooreand Diaz(2015)describedhowSCCmaybeunderestimatedbecausetheeffectofwarmingis compoundedovertimeasgdpisreducedduetoclimateimpacts.whendietzandstern (2015)incorporatedendogenousgrowthintotheDICEmodel,allowedfordamagesto increaserapidlywithrespecttotemperature,andexploredtheclimaticresponsetoghg

83 69 emissions,theyfoundtherangeofdamagesexceedsthoseusedhere.lontzeketal.(2015) createdastochasticversionofdiceandfoundthatthecarboncostswerehigherthan projectedfromthedeterministicversion.also,howard(2014)reportedthatthesccis probablybiasedlowbecausesomeimpactsarenotincluded.nrc2010foundthatalmost allvariationinmarginaldamageestimatesderivesfromdifferencesinassumptionsof discountrateandthemagnitudeofdamagesfromclimatechange,especiallywhether unlikelybutcatastrophiceffectswereconsidered $The$MARKAL$model$ WeusetheMARKAL(MARKetALlocation)energysystemmodeltocomparethefee scenarios(brownetal.,2013;usepa,2013b;etsap,1993;loughlinetal.,2011;loulouet al.,2004).markaluseslinearoptimizationtodeterminethelowestcostsetof technologiesrequiredtomeetenergydemand.allendusedemandsmustbesatisfied, througheithergenerationorconservationtechnologies,andconstraintssuchasemissions regulationscanbeapplied(loulouetal.,2004).markalconsiderstheeconomic advantagesofdifferenttechnologies.incorporatingexternaldamagesascostsensuresthat theenvironmentalcostsarealsoconsidered. WeuseamodifiedformoftheEPAUS9region2014v1.1database(USEPA, 2013b).ThedatabaserepresentstheUSenergysystemfortheyears2005V2055in5year incrementswithasystemvwide5%discountrate.predictionshavebeenmadefortheus energysystemunderthe businessasusual (BAU)caseintheAnnualEnergyOutlook (AEO).TheEPAreleaseoftheMARKALdatabaseisbenchmarkedtothe2014AEO(U.S. EnergyInformationAdministration,2014).Thedatabaseincludestheprojecteddemand forenergyservicesaswellastheexistingtechnologiesineachofthenineuscensus

84 70 regions.demandisspecifiedintermsofheat,lighting,andotherenduseservicesinsteadof theamountofenergyrequiredsothatefficiencyoptionsareavailable.theprojected demandinthedatabasechangesovertimebasedonaeoprojections. Thedatabasealsodefinestechnologiesthatareavailabletoinstall,includingboth traditionalandadvancedoptions.alltechnologiesaredefinedbycapacity,efficiency,cost, andemissionsrate.sometechnologiesalsohavehurdleratesdefined,whicharediscount ratesthatarehigherthanthestandard5%andreflectbehavioralornonveconomicbarriers toinvestmentinnewtechnologies.typicalvaluesforhurdleratesare5v20%.thedatabase includesinvestmentcosts,fuelcosts,andoperationandmaintenancecosts.costsalso changewithtime,especiallyfornewertechnologiesforwhichlearningcurvescausethe costofthetechnologytodecreaseovertime.energysourcesavailableinthedatabase includewaste,solar,wind,naturalgas,coal,geothermal,hydropower,biomass,nuclear, andoil.thedatabaseincludessupplycurvesfornaturalgas,coal,biomass,andoil.the modelalsoincludesenduseefficiencyoptionstomeettheendusedemand,suchas lighting,withareducedenergydemand.resourcesandenergyaretradedbetweenregions wherepathwayssuchastransmissionlinesaredefinedbetweenthosetworegions. Thedatabaseincludesseveralenergysectors,includingtransportation,residential, commercial,andindustrialendusesectorsaswellastherefineryandelectricitysectors thatconvertenergytomeettheendusedemand.thedatabasealsocapturestheenergy cycleincludingresourceextraction,processing,electricitygeneration,electricityanddirect fueluseintheothersectors.controltechnologiesarealsoavailableinthemodel,including carboncaptureandstorage(ccs)toremoveco2,fluegasdesulfurization(fgd)toremove SO2emissions,andavarietyofPMandNOxremovaltechnologies.

85 71 Thedatabasealsoincludessomeexistingregulations.Intheelectricsector,SO2and NOxemissionsareconstrainedtocomplywiththeCleanAirInterstateRule(CAIR), althoughthishassincebeenreplacedbythecrossstateairpollutionrule(csapr),the regulationsareverysimilaratthelevelofresolutionrepresentedinthedatabase.the databasealsoincludesthemercuryairtoxicsrule(mats)aswellasothercleanairactv basedregulations.statelevelrenewablefuelstandardsarealsorepresented.currentus policydirectedatreducingghgemissionsincludesthecleanpowerplan(cpp),which focusesonelectricitygeneration,andtransportationsectorpoliciesincludingcorporate AverageFuelEconomy(CAFE)standards.Thereisalsoproposedpolicytargetingmethane emissionsfromoilandgasextraction(bureauoflandmanagement,interior,2016;us EPA,2015b),butthesearenotrepresentedinthedatabase.TheCleanPowerPlanisnot includedinmarkal,butisdiscussedintheappendix.inthetransportationsector, compliancewiththecafestandardsrequiring54.5mpgby2025andtieriiiemissions regulationsisrequired.intheindustrialsector,theindustrial/commercial/institutional (ICI)boilerMaximumAchievableControlTechnology(MACT)ruleisrepresented. TheflexibilityandcompletenessofMARKALmakeitwellVsuitedforthisstudy. However,MARKALdoeshavelimitationsinwhatitcanevaluate.Whilethismodelcan determinethetypesofresponsestothefeethatmightbelikelyincludingwhetherandhow emissionsarereducedandwhethercovbenefitsordisvbenefitsarelikely,itwouldbe inaccuratetorepresenttheresultsaspreciseemissionsforecasts.markalisnotdesigned todeterminehownovelordisruptivetechnologiesmightcontributetotheenergysystem; itispossiblethatemissionsfeeswouldspurinnovationintechnologiesthatarenot representedinthemodel.althoughsomeenergysectorsaremorecapableofrespondingto

86 72 thesefeesinboththemodelandreallife,certainsectorsmaynothaveenoughtechnologies modeledtorespondtothefeesevenifsuchoptionsareavailableintherealworld, especiallyifnewerfinancingortechnologyoptionsgaintractioninsectorssuchas residential,commercial,andtransportation.markalprovidesapictureofthepossible responsestoemissionsfeesandshowsthatemissionsreductionstoacertainlevelare possible,buttheresultsdonotshowtheonlypossiblepathwaytoemissionsreductions $MARKAL$Database$Changes$ 'Emissions' StartingfromtheEPAUS9regiondatabasedescribedabove,wemodifycertain aspectsofthedatabasetobettersuitanalysisofthepossiblemethodsofreducing emissions.amorecomprehensivedocumentdetailingthechangescanbefoundinthe appendix,aswellasacomparisonoftheepabasecasewiththebasecaseusedhere. Additionalemissionstrackingparametersareaddedtobeabletoanalyzeemissionsfrom eachsector(electricitygeneration,refining,industry,transportation,commercial,and residential).wealsoimprovetreatmentofupstreamemissionsbybothaddingpreviously uncountedemissionsaswellasaddingtheabilitytotracktheseemissionsseparately.in additiontoaddingemissions,co2uptakeforbiomassproductionwasaddedaswell,as describedintheappendix.theadditionalvaluesandsourcesaregivenintable 'Technology'Changes' MostofourchangestotheEPAdatabasearefortheindustrialsector,becausemany technologiesthatcouldbeusedtoreduceemissionsinthissectorarenotincludedinthe originalepadatabase.theepadatabaseincludesdemandforbothheatandenergyinthe

87 73 industrialsector.therearedifferentfueloptionsavailabletomeetthesedemands,butno emissionscontroltechnologies.theonlyefficiencyimprovementdefinedintheepa databaseisfornaturalgasboilers.duetothecomplexandvariednatureoftheindustrial sector,itisnotpossibletorepresentthefullrangeofmethodsavailabletoreduce emissions,assomeemissionsreductionoptionsareonlyavailableforsmallsubsectorsof industrialenergyuse.weexpandthetechnologiesmodeledintheindustrialsectorto createarepresentativepictureofthetypesofresponsesavailable(i.e.,fuelswitching, efficiencyimprovementsandcontroltechnologies),whichallowsustobetteranalyze whichemissionsreductiontechniquesmightbeimportant. Forthisstudy,weaddtheoptionofimprovingboilerefficiencybyonepercentage pointatanassociatedcapitalcostof1.082millionusdperpj(usepa,2010)forboilers notfueledbynaturalgas.thisisnotanadditionaloptionfornaturalgasboilersbecause theiciboilermactrulealreadyrequiressimilareffortsforthem. EmissionscontroltechnologiesforNOx,SO2,andPMareaddedtoboilerandprocess heatenergyuse.thetechnologiesaddedarebasedoncost(misenheimeretal.,2010) modeling 2.Forboilers,twolevelsofNOxcontrolsandonelevelofSO2controlsareadded. Forprocessheat,optionsareaddedtocontrolSO2,PMandNOx.Allcontrolsbecome availablein2015witha40vyearlifetime.penetrationofcontrolsisconstrainedtoatmost 80%ofthepossiblelevel.ForboilerssubjecttotheboilerMACTregulationsorforwhich othercontrolsareassumedintheepadatabase,additionalcontrolsarenotmodeledon affectedpollutants,withtheexceptionthatinsomecaseslownoxburners(lnb)existfor boilersbutselectivecatalyticreduction(scr)andselectivenonvcatalyticreduction(sncr) 2 CoST modeling performed by Julia Gamas at the EPA

88 74 controlscouldstillbeapplied.nopmcontrolsareaddedtoboilersbecausewheretheyare feasibletheyhavealreadybeenusedtocomplywiththemactregulations.novoc controlsareaddedbecausethecontrollablesourcesdonotfitwellwiththetechnologiesin MARKAL,becausetheyareeithernotstrictlypartoftheenergysystemorareappliedto specificprocessesnotexplicitlydefinedinmarkal. Forrefineries,newemissionscontroloptionsareaddedusingperformanceandcost estimatesdeterminedbasedondatainthemidvatlanticregionalairmanagement Associationreport(MARAMA,2007).AwetscrubberprovidestheSO2andPMcombined control;twonoxreductionoptionsareadded,andadvancedleakdetectionandrepair (LDAR)techniquesarerepresentedtoreduceVOCemissions. AlthoughtheUScurrentlydoesnotutilizemuchsolarheatintheindustrialsector, othercountrieshavefoundsolarenergytobeacostefficientsourceofindustrialheat (Islametal.,2013).Wedefineaflatplatesolartechnologythatisonlyavailableforthefood sectorbasedontemperaturerequirements.weaddtheoptionofusingparabolictrough technology,withperformancecharacteristicsadaptedfromdatafromthesystemadvisor Model(Blairetal.,2014)forconcentratingsolarpower,andtheinvestmentcostbasedona PublicInterestEnergyResearch(PIER)demonstrationfacilityinCalifornia(Rubyand AmericanEnergyAssets,CaliforniaL.P.,2012).Theuseofthesetechnologiesis constrained,becausesolarthermalenergyrequiresspaceandcertaintemperature demands.theconstraintsimplementedarebasedonlauterbachetal.(2012)andhurdle ratesweresetto20%. WealsoaddedCarbonCaptureandSequestration(CCS)controltechnologyoptions forcementprocessheat.ccsisincludedintheoriginaldatabaseonlyforelectricity

89 75 generation.theemissionsforcementprocessheatarealsoalteredtotakeintoaccountthe largeportionofco2thatoccursduetocalcinationinadditiontotheco2emissionsrelated tofuelcombustion,becausetheseemissionscanaltertheeconomicsofusingthecontrols 'Other'changes' Constraintsareaddedtoensurethatoldercoalfiredpowerplantsareretiredafter theyhavebeeninoperationforabout75years,becauseintheepadatabasemostmid twentiethcenturycoalfiredpowerplantsarenotretiredwithinthetimeframeofthe model.theco2removalefficiencyisloweredforbiomassintegratedgasificationcombined Cycle(IGCC)withCCSbasedonthekgC/kWhrategiveninRhodesandKeith(2005) $Scenario$Description$ Weruntenfeecasesandanofee(akabase)case.ThreeHIPfeecasesandfourGHG feecasesarerunusingthefeesdescribedabove(table3.1).threecombinedfeecasesare run,onewithmidrangehipfeesand3%averageghgfees(thelowestcombinedfeecase), onewithhighhipfeesand3%averageghgfees(theintermediatecombinedfeecase),and onewithhighhipfeesand2.5%averageghgfees(thelargestcombinedfeecase).fees startin2015inallcases.insomefigures,resultsfromthebasecasearepresentedfor2010 toshowtheprevfeeleveland2045tocomparetotheotherresults $Current$energy$system$ ThecurrentUSelectricitysystemusesmostlycoalandnaturalgastogenerate electricity.therearesometechnologiesalreadyinplacetoreduceemissionsofhealth impactingpollutants,butmorestringentcontroltechnologiesareavailable.theindustrial sectorusesmostlynaturalgaswithsomeactionstakentoreduceemissions,butagain

90 76 furtheremissionsreductionsarepossible.thetransportationsectorusesmostlygasoline anddieselfuel,andexistingemissionscontrolsarealreadywidelyused.furtheremissions reductionscouldbeachievedinthissectorfromadvancedvehicletechnologies,including fuelcellandelectricvehicles.thereisincreasingdemandforenergyservicesinallsectors aspopulationisexpectedtoincreasewithtime.figure3.1givesasenseofthisincreasefor mostsectorsinthebasecase,althoughitdoesnotexplicitlyshowtheincreaseindemand forthetransportationsector(roadwayvehiclemilestraveledisexpectedtoincrease43% inallmarkalcasesfrom2015to2055)asbothmilestraveledandfuelefficiencyincrease PJofenergy Electricity Industry Transportation Residential Commercial Figure3.1.Totalfuelusedorelectricityproducedbyeachsectoracrosstimeinthebase caseasaproxyforincreaseindemandforenergyservices.vehiclemilestraveledalso increase,buttransportationfueluseismitigatedbyincreasedefficiency. 3.3Results 3.3.1$Emissions$$ EmissionsofHIPsdecreaseovertime,inspiteofincreaseddemand,duetocurrent emissionreductionpoliciesfortransportationandelectricsectoremissions.inthebase

91 77 case,noxemissionsarereduced39%from2010levelsin2045.thisisachievedbya64% reductionintransportationnoxemissionsanda30%reductioninelectricsectornoxand inspiteofa33%increaseinindustrialnoxemissions.pm2.5emissionsare21%lowerin 2045inspiteofa54%increaseinindustrialemissions,duetoa63%reductionin transportationsectoremissionsanda70%reductioninelectricsectoremissions.basecase SO2emissionsin2045are52%lessthanin2010.Althoughindustrialemissionsincrease 22%inthistimeperiod,electricsectoremissionsdecrease75%.VOCemissionsare31% lowerin2045,mostlyduetoa74%decreaseintransportationsectorvocemissions. WhenconsideringeitherHIPorGHGfeeVdrivenscenarios,wefindthatNOx emissionsreductionsfromfees(seefigure3.2)arethegreatestintheelectricsector, followedbytheindustrialsector.electricsectoremissionsarereducedbyupto82%with highhipfees,butonlyafewpercentwithlowhipfees,and11v33%withmidrangefees acrossdifferentyears.ashipfeesincrease,morestringentelectricsectornoxcontrolsare used.withmidvrangeorhighhipfees,refinerynoxemissionsarereducedby56% comparedtothebasecase.industrialsectornoxemissionsdecrease9v42%forhipfee casesacrossfeelevelsandyearsandindustrialboilernoxcontrolsareusedwithmidvrange andhighhipfees.transportationemissionsarereducedbyatleast12%by2040inall caseswithhipfeesandevenearlierwithhighhipfees. GHGfeesalsocauseHIPemissionsreductions.ElectricsectorNOxemissionsare reducedbyupto37%with2.5%averageghgfees,butwith3%95 th percentilefeesthe reductionisonlyafewpercent,becausethetechnologiesusedinthiscasearequite differentfromtheotherghgfeecases.industrialsectornoxemissionsdecrease3v24%in

92 78 GHGfeecases.WithGHGfees,transportationNOxisreduced12%in2040andbeyond, exceptfor5%averageghgfeesinwhichonlya3%reductionisachieved kilotons NoFee HighHIP LargestCombo 2.5%avgGHG NoFee HighHIP LargestCombo 2.5%avgGHG NoFee HighHIP LargestCombo 2.5%avgGHG NoFee HighHIP LargestCombo 2.5%avgGHG electricity industrial transportation upstream rezinery residential commercial NOx. PM10. PM2.5. SO2 Figure3.2.HIPemissionsin2045forselectedcases.Theresultsforallcasescanbefound intheappendixinfigures3.17v20.thelargestcombinedfeecaseincludeshighhipfees and2.5%averageghgfees. ForPMemissions,overhalfoftheemissionsinbothsizefractionsinthebasecase arefromupstreamprocesses,becausecontroldevicesareusedinmostenduseand electricitygenerationscenarios,butthemodeldoesnothaveanycontrolsforupstream processes.upstreampmisalsothemostresponsivetofees,whichcanbetracedtoa reductioninminingemissionsassociatedwithreducedcoaluse.withhighhipfees, upstreampm2.5emissionsareupto67%lessthanthebasecaseinthesameyear.forpm10, theresponseisevenlarger,with14v92%reductionafter2020inhipfeecases.withallhip fees,therefinerypm2.5is30v32%lowerthanthebasecase(32v29%forpm10).industrial

93 79 sectorpm2.5is25v33%lowerthanthebasecaseforanycaseswithmidvrangeorhighhip fees(29v42%forpm10),butonly8v13%lowerwithlowhipfees(18v23%forpm10). Emissionscontrolsareappliedintheindustrialsector,withmorestringentcontrol technologiesbeingusedashipfeesincrease.withhighhipfees,electricsectorpm2.5and PM10is53V79%lessthanthebasecase.WithmidVrangefees,thePM2.5reductionis34V57% (42V74%forPM10)acrossdifferentyears.WithlowHIPfees,thereductionisnevermore than5%.fabricfiltersareappliedinresponsetofeestoreduceelectricsectorpm emissions.inallghgfeecases,upstreampm2.5andpm10emissionsarealwaysatleast58% lessthanthebasecase.withghgfees,theindustrialpmdoesnotdivergefromthebase caseuntil2035,afterwhichtheemissionsarestillwithin10%forpm2.5and16%forpm10 exceptforthe3%95 th percentileghgfeecase,whichhasupto15%lesspm2.5and21% lesspm10.electricsectorpmchangesthemostbetweencases.withghgfees,pmfromthe electricsectoractuallyincreases(uptoseveraltimes)duetotheincreaseduseofbiomass covfiring.withtheuseofadditionalcontrols,thisimpactcouldbemitigated,butadditional regulationmayberequiredbeforesuchtechnologyisinstalled. SO2emissionsarehighlytiedtocoaluse,sotheyareheavilyaffectedbyfuelchoice, butalsobycontroltechnologies.withhighhipfees,theelectricsectorso2emissionsare reducedbyatleast98%in2025andbeyondandatleast63%startingin2015;midrange HIPfeereductionsare76V81%after2020.WithlowHIPfees,electricsectorSO2emissions arewithin30%ofthebasecase.intheelectricsectorfgdscrubbersareusedtoreduceso2 inallcases,butreducedcoaluseisalsoalargefactorwithmidorhighhipfees.industrial SO2emissionsare35V62%lessthanthebasecaseindifferentyearswithmidorhighHIP fees.inthemidandhighhipfeecases,so2controlsareusedforprocessheatandboiler

94 80 emissionsintheindustrialsector.ghgfeescorrespondingtothe2.5%averageor3%95 th percentilelevelsreduceelectricsectorso2emissionsbyatleast83%after2025,whilethe smallerandlargerghgfeesleadtolowerreductions.withghgfees,theindustrialso2 emissionsare2v33%lessthanthebasecase. VOCemissionsdonottypicallydecreasewithfees,andmayevenincreasewithfees becausetherearelimitedcontroltechnologiesmodeledtoreducetheseemissionsandthe feesonvocsaresmallerthanonotherpollutants.vocsarediscussedfurtherinthe appendix. AsshowninFigure3.3,CO2emissionsarelowerthaninthebasecaseinallfee cases.mostofthereductionsoccurintheelectricsector.withmidrangehipfees,the electricsectorco2emissionsare8v12%less,andwithhighfees38v47%lessacross differentyears.therearealsoreductionsfromtheindustrialsector.withhighhipfeesthe reductionisupto14%,or10%withmidrangefees.electricsectoremissionsin2040are 9V13%lowerthaninthebasecasewith5%averageGHGfees,26V35%lowerwith3% averageghgfees,37v46%lowerwith2.5%averagefees,and89%lowerwith3%95 th percentilefees.ccsisusedintheelectricsectortoreduceco2emissionsinthe2.5% averageand3%95 th percentilecases.thesequesteredco2isrepresentedinfigure3.3as anoutlinedbox,becauseitdoesnotcontributetothetotalemissions.2.5%ghgfees reduceindustrialco2by5%inmostyears,while3%95 th percentilefeescausereductions upto12%and3%averagefeescausereductionsofatmost6%.

95 GigatonsofCO sequestered uptake electricity industrial 1 transportation 0 present future low mid high 5%avg 3%avg 2.5%avg 3%95th lowest intermediate largest upstream rezinery residential commercial base HIP GHG combo Figure3.3CO2emissionsbyenergyusesectorin2045forvariousfeecases.Thelowest combined(combo)feesinclude3%averageghgfeesandmidvrangehipfees,the intermediatecombinedfeesinclude3%averageghgfeesandhighhipfees,andthelargest combinedfeesinclude2.5%averageghgfeesandhighhipfees. Methaneemissionsarealmostentirelyupstream(seeFigure3.21).Differencesin methaneemissionsbetweencasesaresmallandmostlyrelatedtothechangesinuseof naturalgas,becausecontroloptionsarenotmodeledforupstreammethaneemissions.in thehighhipfeecase,methaneemissionsareactually6%higherthaninthebasecase;with midrangehipfeestheyare2%higherthaninthebasecase.theyare6%lessthaninthe basecasewith2.5%averageghgfees,and14%lesswith3.5%95 th percentilefees. Combinedfeesreducetotalemissionsofapollutantmorethaneithersetoffees alonewhileusingfewercontroltechnologies,althoughtheemissionsfromaparticular sectormaybeslightlymore.withcombinedfees,industrialnoxcontrolsareusedless becausemorefuelswitchingoccursthatreducescontrollableemissions.industrialsector NOxemissionsareslightlyhigherincombinedfeecasescomparedtoHIPfeecases.After

96 ,combinedfeesreduceelectricsectorNOxbyatleast60%andupto83%,whichis morethanwithhipfeesalone.thelowestcombinedfeehaslargerreductionsinso2than eithersetoffeesalone,89v94%lowerelectricsectoremission.theintermediateand largestcombinedfeecaseshavesimilarreductionstothehighhipfeecase.inthe combinedfeecases,industrialso2controlsareusedlessbecausemoreemissionsare reducedthroughfuelswitching.thepminthecombinedfeecasesbehavessimilarlytothe HIPfeecases,exceptthattheupstreamPMinthelowestcombinedfeecaseisreducedby about70%after2025,muchmorethanwiththemidvrangehipfees.thecombinedfee caseshaveslightlylargerreductionsofco2thaneithersetoffeesalone.ccsisnotusedin anycombinedfeecases.withcombinedfeesmethaneemissionsarereducedaswell,upto 5%,whichislessthanwithGHGfeesalone,butavoidstheincreaseseenwithonlyHIPfees $Industrial$sector$technologies$ Inallcasesintheindustrialsector,naturalgasandbiomassVfiredboilersareadded tokeepupwiththeincreaseddemandovertime.electricity,lpg,andnaturalgasuse increasetomeettheadditionalprocessheatdemand.increasednaturalgas,biomass,and electricityusealsohelpmeetincreaseddemandforotherindustrialenergyneeds,although energyproductsusedforfeedstockincludeanincreaseinoiluse. TherepresentationofmanyoftheenergyusesinintheindustrialsectorinMARKAL arestillfairlyinflexible,despitethemodificationsmadeforthisstudy,buttheadditionsto themodeldiscussedaboveallowforresponsestothefees.weonlydiscusstheboilerand processheatenergyusesbecausetherearenotenoughtechnologyoptionsintherestof theindustrialsectorforchangestooccur.theoneexceptionisthatthe other energyuse categoryhassomeflexibility;ashipfeesincrease,theuseofpetroleumcokeandcoal

97 83 decreasesandtheuseofelectricityandoilincreasestomaintainthesamelevelofenergy provided,seefigure3.24intheappendix. Forprocessheat(seeFigure3.22),themainchangewithfeesisforthecaseswith midorhighhipfees,wherecoaluseissignificantlyless(noneatallinsomeyearswith highhipfeesandatmost16%ofthebaseusewithhighhipfeesor63%withmidvrange fees)andconsequentlytheuseofelectricityisincreased.thesameeffectisseentoamuch smallerdegreeforthe3%95 th percentileghgfeecase(63v94%asmuchcoalisused comparedtothebasecase).thelowestcombinedfeesuseslightlymorecoalthanthemidv rangehipfees,whilebothcombinedfeecaseswithhighhipfeesuselesscoalthanthehigh HIPcasealone.Thesolarthermaltechnologiesareusedinallcases.Flatplatesolarisused tothemaximumextentallowedbytheconstraintsinallcasesincludingthebasecaseasit issuchaninexpensivetechnology.concentratedsolarheatisusedtosomeextentinall cases,butwithhighhipfeesoranyghgfeestheuseofthistechnologyishigherthaninthe basecase.duetotheconstraints,thisrepresentsasmallfractionoftheoverallenergyuse. Incaseswhereuseofconcentratedsolarisgreater,lessLPGisused.

98 84 Petajoules Present Future Low Mid High 5%avg 3%avg 2.5%avg 3%95th Lowest Intermediate Largest NoFee HIPFee GHGFee Combined Fee Oil+LPGEfzicient Oil+LPG NGEfzicient NG Electricity CoalEfzicient Coal Biomass Figure3.4Fueluseandenergyefficiencyinindustrialboilersin2045. Thelargestshareoftechnologychangesinresponsetofeesintheindustrialsector occurswithboilers,seefigure3.4.aswithprocessheat,coalusedecreaseswithmidvrange orhighhipfeesand3%95 th percentileghgfees,comparedwiththeothercases.natural gasuseincreasesashipfeesincrease.efficientnaturalgasboilersareusedmoreinthe highhipcaseinallyears,whilemidrangehipfeesleadtoearlierimplementationwith similarfinallevels.inthebasecaseandlowandmidhipfeecasesefficientlpgboilersare usedforabouthalfofalllpgboilersthrough2040,afterwhichtheirusetrailsoff.with highhipfees,theefficientlpgboilersarenotused,butalllpgboilersareusedlessthan halfasmuchinthesecases.theefficiencyretrofitsforcoalboilersareusedinlowandmid HIPfeecases,forlessthan10%ofcoalboilers.Upto9%ofthecoalboilersareupgradedin themidvrangehipcase,sothiscaseisbuildingnew,moreefficientcoalfiredboilersaswell asimprovingtheexistingones.naturalgasuseishigherwithallghgfees,althoughthe naturalgasuseislowerforthe3%95 th percentilecasethanthe2.5%averagecase.inthe

99 85 3%95 th percentileghgfeecase,efficientnaturalgasboilersareusedmorethaninthebase caseinallyears,whileinthemidandhighghgfeecasestheefficientnaturalgasboilers areusedmoreinearlieryears,butatasimilarleveltothebasecaseafter2040.theboiler retrofitsforlpgareusedforjustoverhalf(57%)ofthelpgboilersinallghgfeecases. ThenewupgradedcoalboilersarealsousedinalloftheGHGfeecases,butalwaysatless than10%ofallcoalboilers.theuseofboilersincreaseswithghgfees,buttheuseoffuels forunspecifiedindustrialneedsdecreasesinthesecasessothisisnotaninefficiency,buta shiftinenergyusethatisnotapparentfromthesubsetofresultspresentedhere.natural gasboileruseishigherforthecombinedfeecasesthanforthecorrespondingsinglefee cases,buttheefficientnaturalgasboilersareusedtoasimilarextentinthecombinedand singlefeecases.somediscussionofindustrialcontroltechnologiesoccursintheprevious sectiononemissions,andanadditionalfigure3.23andmoredetaileddiscussionofthese technologiescanbefoundintheappendix $Electric$sector$technologies$ Electricitygenerationanduseincreasesovertimeinallcases.Mostoftheincrease ismetthroughanincreaseingenerationwithnaturalgascombinedcycle(ngcc) technology.windgenerationincreasessharplythrough2035althoughitremainssmallin comparisontonaturalgas.solar,albeitasmallpercentageofgeneration,alsoincreases throughoutthetimeperiod.theinvestmentcostofwindandsolarisprojectedtocome downovertimeasistheinvestmentcostforthemostefficientngccplants.hydropower andnucleargenerationremainquiteconstantacrosstimeandcasesduetothehurdlerates inplacetorepresentregulatoryandotherdifficultiesofconstructingthesenewfacilities

100 86 combinedwiththeirlargeupfrontcosts.investmentinnewhydroelectriccapacityisnot allowedinthemodelduetothedifficultyofsitingnewfacilities. Formostfees,thelargestchangeinelectricitygenerationtechnologiesoccursfor coalandnaturalgas,seefigure3.5.by2020,electricitygeneratedfromcoalis75%less thaninthebasecaseforhighhipfees,butformidrangehipfeesitisonly24%less.much ofthiscoalisdisplacedbyngcc.incaseswithhighhipfees,someoffshorewindisused, butthisislessthan1%oftotalwinduse.with2.5%averageghgfees,coalisused75% lessthaninthebasecaseafter2030.with3%averageghgfees,generationfromcoalis 60%lessthaninthebasecase.IntheGHGfeecases,morerenewabletechnologiesare used,particularlywind,whichisusedapproximatelytwiceasmuchasinthebasecasein the2.5%ghgfeecaseafter2025. Theelectricitymixinthecasewith3%95 th percentileghgfeesismuchdifferent fromthatinothercases.althoughelectricityfromcoalisonlyslightly(5%)lowerthanfor 2.5%averageGHGfees,electricityfromnaturalgasisalsolowerthaninallothercasesby 2045.Althoughnaturalgashaslowercarbonintensitythancoal,CO2andmethanearestill released.threeandahalftimesmoreelectricityisgeneratedfromwindpowercompared tothebasecasein2045(60v77%morethanwith2.5%averageghgfees),andsolar thermaluseismuchlargerthaninothercases(upto10timesasmuch).solarthermaluse increasesmorethanpv,whichhasalowercapitalcost,becausethecapacityfactorforsolar thermalishigherduetothethermalenergystoragebuiltintothisgenerationtype.biomass covfiredwithcoalisalsomuchhigherinthiscasethanintheothers,upto33timesmore thaninthebasecase,althoughthisfallsoffinlateryearsascoalusedecreases.thisshift awayfromnaturalgasandtowardsalargerincreaseinrenewableswithlargefeesshows

101 87 thatthechangesdonotscalelinearlywithfees,asfeesbeyondacertainlevelleadto responsesthatarequitedifferentfromfeeslowerthanthatlevel. Table3.2.Thecostofthefeesforlifecycleemissionstranslatedto$/kWhfortwoelectricity generatingtechnologiesin2045. Taxed& pollutant& Level& Coal& NGCC& GHG& 5%&avg& 0.02& 0.01& GHG& 3%&avg& 0.07& 0.03& GHG& 2.5%&avg& 0.09& 0.04& GHG& 3%&95th&& 0.21& 0.08& HIP& low& 0.01& 0.000& HIP& mid& 0.05& 0.001& HIP& high& 0.18& 0.002& Theemissionsfeesarealteringtheeconomicsofenergyuseinacomplexsystemof energyprices.naturalgaspricesarehigherinthecasewithhighhipfeesthantheother cases,duetoincreaseduseofnaturalgasandcorrespondinglyhighercostsonthesupply curve.becausecoalhasmuchhigheremissionsthannaturalgas,highfeescanmakecoal themoreexpensivefueltousetogenerateelectricity.evenaccountingforthelow efficiency,thefuelandfacilitycostsforexistingcoalplantsarelowerthanfornewnatural gasplants;however,thefeesoncoalemissionswithhighfeesoutweightheothercostsof coalgeneration.table3.2showstheadditionalcostduetofeesforanexistingcoalfired powerplantandanewngccplantassumingnoadditionalcontroltechnologies,both operatingin2045,whereitisobviousthatthehigherefficiencyandloweremittingfuel usedinngcccontributetomuchloweremissionfeesassociatedwiththattechnology.see thesiforacomparisonoftheseresultswiththecleanpowerplan,adiscussionofccs

102 88 assumptions,andacommentonconstraintsonrenewables. Petajoules(PJ)ofelectricitygenerated present future low mid high 5%avg 3%avg 2.5%avg 3%95th lowest intermediate largest NGCC NGother coal wind other biomass solarthermal solarpv nuclear base HIP GHG combined hydropower Figure3.5Fuelsandtechnologiesusedtogenerateelectricity.The"other"category includesoil,geothermal,andwasteenergy.thelowestcombined(combo)feesinclude3% averageghgfeesandmidvrangehipfees,theintermediatecombinedfeesinclude3% averageghgfeesandhighhipfees,andthelargestcombinedfeesinclude2.5%average GHGfeesandhighHIPfees. 3.5.Discussion Allfeecasesleadtoemissionsreductions,butthedegreeofreductionandthe technologiesusedtoachievethosereductionsdiffersfordifferentfeesstudied.hip emissionsgenerallydecreasewithtimeinallcases,includingthebasecase,anddecrease ashipfeesincrease.thedecreaseinemissionsovertimeisduetopoliciesalreadyinplace toreduceemissionssuchascairandcafe.manyofthehipsarereducedwithghgfeesas well.althoughhipsareoftenreducedwithghgfees,thecovreductionstendtobelesswith 3%95 th percentileghgfeesthanwith3%or2.5%averageghgfees,becausethiscase usesadifferentfuelmixthanthelowerghgfeecases.energyefficiencytendstobemore

103 89 importantforcaseswithghgfees.lesstotalelectricityisproducedinghgfeecasesthan othercases,withmostofthereductionindemandcomingfromtheindustrialsector followedbytheresidentialsector. Althoughthefeesvarybysector,thesectorswiththemostemissionsreductions tendtobedrivenmorebytheavailabilityandpriceoftechnologiesthanthevalueofthe damagesacrosssectors.thefeesaretypicallylowestfortheelectricsector,butthisisthe sectorwiththelargestemissionsreductions.thissectoralsohasawealthoftechnology optionsdefinedinthemodelthatcanbeusedtogenerateelectricity.manyofthe technologiesarealsolessexpensivethansimilartechnologyoptionsinothersectorsdueto economiesofscale.thehighestfeesarealwaysinthetransportationorresidentialsectors, twosectorsthatshowverylittleresponsetofees.figure3.6displaysthefeescollectedin eachcase,andthetransportationsectoraccountsforatleast30%ofthefeescollectedin GHGfeecases,butthereisalmostnoreductioninthoseemissionswithfees.Similarly,with HIPfeestherevenuecollectedfromtheresidentialsectorcompriseabout20%ofthefees collectedinthosecases,withverylittlechangeinemissionsacrosscases.inthemodel, therearefewertechnologyoptionsinthetransportation,residential,andcommercial sectors;betweenupfrontcostsandhighdiscountratesitismuchlesslikelythatalternative optionswillbechosen.thehighercostsinthesesectorsarerealistic,andthehighdiscount ratesusedinthesesectorsrepresentobservedbehaviorsuchasthehesitanceorinability ofindividualorsmallerscaleconsumerstospendmoneyonlargeupfrontinvestmentsand lessfamiliartechnologies(e.g.,usepa,2013b).thereisapossibilitythatadditional technologiescouldbedevelopedorthatincreaseddemandforoptionswouldbringdown thecostofexistingbutexpensiveoptionsinthesesectors,forinstancenovelfinancinghas

104 90 increasedresidentialpvinstallations(coughlinandcory,2009).thisisanexamplewhere themodelmightnotfullydescribetherealworldresponsetothefees,ifthepriceor optionsoftechnologiesinsectorswithhighfeesweretochangeinresponsetothepolicy. Theindustrialandrefinerysectorshavecoststhatarehigherthantheelectricsector,but lowerthantheothersectorsandhaveresponsesinlinewiththisexplanation,lower reductionsthantheelectricsector,buthigherthanothersectors.theupstreamemissions arehardertotargetforreductions,becausetakingactionsthatloweroverallemissions maysometimesincreaseupstreamemissions. Figure3.6.Thefeescollectedbysectorineachcasein2045inyear2005USD.Thelowest combined(combo)feesinclude3%averageghgfeesandmidvrangehipfees,the intermediatecombinedfeesinclude3%averageghgfeesandhighhipfees,andthelargest combinedfeesinclude2.5%averageghgfeesandhighhipfees. Comparedwithpreviouswork(Brownetal.,2013),thefuelsandtechnologiesused togenerateelectricityaremorelikelytochangewithhipfees.someofthisislikelydueto changesinthecostofnewertechnologiescomparedtopreviouspredictions.inparticular, low mid high 5%avg 3%avg 2.5%avg 3%95th lowest intermediate highest HIP GHG combo Billion$ electricity industrial transportation upstream rezinery residential commercial

105 91 theinvestmentcostanddiscountratefornaturalgasegusarebothlowerthanfor previousmodelversions,andthenaturalgassupplyislessexpensiveaswell.onechange frompreviousstudiesusingmarkalisthattheinvestmentcostsandhurdleratesinthe modelhavebeenrevevaluatedbasedonfactorssuchasreadiness,publicacceptability,and uncertaintyaboutfuturepoliciessothatnewnaturalgasplantsaremorelikelytobebuilt thanbefore. Asexpected,feesreducethetargetedpollutantwithlargerreductionsasthefees increase.formostofthefees,thenonvtargetedpollutantsofinterestarealsoincreasingly reducedasfeesincrease.althoughthe3%95 th percentileghgfeesleadtoamuchlarger reductionintargetedemissionsthanthenextlargestfees(2.5%),thereareactuallymore HIPemissionsinthiscasethanthe2.5%GHGfeecase,seeFigure3.2.Thisisduetoashift awayfromnaturalgasandanincreaseinbiomasscombustionwithlargefees,whichshows thattheresponsetodifferentlevelsoffeesismorecomplicatedthanasimplescaling, wherefeesbeyondacertainlevelleadtoresponsesthatarequitedifferentfromfeeslower thanthatlevel.theuseofccsalsodecreasescovbenefitsbecausethistechnologygreatly reducestheoverallefficiencyoftheelectricitygenerationsystem,whichleadstoan increaseinpollutantsotherthanco2forthatfacility.thisreversalofcovbenefitsforthe highestghgfeesshowsthatitisimportanttoconsideralleffectsofinterestforeachpolicy proposalandnotjustassumethattherelationshipbetweenemissionsofdifferent pollutantsislinear. InmostcasesthebehaviorofthecombinedfeesissimilartothatoftheGHGorHIP specificfees.theemissionsreductionisgenerallygreaterthanoratleastequaltothatof thesinglecomponentfeecasewithfeesdirectedatthatpollutant.themethodofreducing

106 92 emissionsissometimesdifferent,however.particularlywhencontrolsareusedwithhip fees,morereductionsareachievedthroughefficiencyorfuelswitchingincombinedfee casesbecausethosetypicallyreduceallemissionsinsteadofasubset.forinstance,fewer industrialcontrolsareusedinthecombinedfeecases,butmoreelectricityisgenerated usingwindsothattotalhipemissionsarereduced.theinvolvementoftwodifferent sectorsinthischangebetweenthecombinedandhipfeecasesshowsthatthereis interplayintermsofwhereemissionsreductionsoccur,andthatincludingmoresectors leadstomoreoptionsforemissionsreduction.becausetheemissionsreductionsareoften largerincombinedfeecasesthanthecorrespondingghgandhipfeecases(seefigure3.7) andfollowlesstargetedemissionsreductiontechnologytrajectories,coordinatingghgand HIPfeepoliciesmayallowformoreeconomicalreductionsinemissionsthantwoseparate policies.

107 93 NOx. SO2. CO2 MegatonsofNOxandSO2,GigatonsofCO2 0 V0.5 V1 V1.5 V2 electricity industrial total electricity industrial total electricity industrial total V2.5 highhip largestcombo 2.5%GHG Figure3.7Thereductioninemissionsin2045comparedtoNoFeecaseemissionsin2045 fortheelectricandindustrialsectorsaswellastotalemissionsreductionsforthatcase. ThecoVreducedemissionsinFigure3.7presentaninterestingstory.Totalemissions reductionsinthecombinedfeecasesarelargerthanforthecomponentfeecases,asthe largestcombinedfeecase(inred)includesbothhighhipfeesand2.5%ghgfees.theso2 reductionsinthecombinedfeecasearenearlyidenticaltothehipfeecaseandthenox reductionsareonly5%morewithcombinedfeesthanhipfeesalone.theco2emissions arereducedanadditional22%comparedtotheghgfeecasewithcombinedfees.this showsthatwhilecombinedfeesleadtoadditionalreductionsforbothcategoriesof pollutantsconcerned,theghgbenefitislarger.thecovbenefitofindividualfeesisalsoof interest.whilethecovbenefitsofhipfeesaretotalco2reductionsthatare93%ofthose

108 94 achievedwithghgfeesalone,thetotalnoxandso2emissionsreductionsfromghgfees areonly44%and56%ofthoseachievedbyhipfees,respectively.althoughthisfindingis sensitivetowhichtwosetsoffeesarecompared,thehighhipfeesleadtosimilarorlarger reductionsinco2emissionsthanmostoftheghgfeecases,whilenoxandso2reductions withanyghgfeesaresmallerthanallbutthelowhipfeecase.damagebasedemissions feesleadtoreducedemissions,butthedegreeofreductionandpollutantsreduceddepends onthespecificfees.targetingallpollutantsofinterestwillensurethosepollutantsare reduced,whereasoptimalemissionslevelsmaynotbereachedifpoliciesrelyoncov benefitstoproduceemissionsreductionsforsomespecies. 3.6Appendix 3.6.1$Social$Cost$of$Carbon$ Table3.3GHGdamagesusedasfees,fromthesocialcostofcarbon(InteragencyWorking GrouponSocialCostofCarbon,2013) EffectofDatabaseChanges ThebasecaseusedhereiscomparedtothedatabasereleasedbytheEPAtoshowtheeffect ofthechangesdescribedinsection3.7.

109 kt EPA Modizied Figure3.8Methaneemissionsinthebasecaseusingtwodatabaseversions. Thereasonthatthemethaneemissions(Figure3.8)aresomuchhigherintheEPA databaseisthatverylargevalueswereusedforupstreamcoalmethane Megatons EPA Modizied Figure3.9CO2emissionsinthebasecaseusingtwodifferentdatabaseversions. WhereCO2emissions(Figure3.9)arelargerinthemodifiedbasecase,thisisdueto thelifecycleemissionsadded.inlateryears,thecoalretirementconstraintsaffectthe modifiedcaseandarethereasonfortheloweremissionsinthoseyears.

110 kt EPA Modizied Figure3.10NOxemissionsinthebasecaseusingtwodifferentdatabaseversions kt EPA Modizied Figure3.11PM2.5emissionsinthebasecaseusingtwodifferentdatabaseversions.

111 kt EPA Modizied Figure3.12SO2emissionsinthebasecaseusingtwodifferentdatabaseversions kt EPA Modizied Figure3.13VOCemissionsinthebasecaseusingtwodifferentdatabaseversions. TheHIPemissions(Figures3.10V3.13)arehigherinourbasecasebecauseofthe additionallifecycleemissionstrackingthatwasnotconsideredintheepabasecase.

112 PJ NGCC NGCHP NGturbine NGsteam coalchp coalsteam windon solarthermal solarpv bioigcc biochp biosteam wastewaste geogeothermal nuclearnuclear oilchp oilother hydrohydro Figure3.14Electricitygenerationbyfueltypeinthebasecaseusingtwodifferentdatabase versions,theepareleaseandthemodifiedversionusedhere.theleftcolumnforeachyear presentstheresultsfromthemodifieddatabase,andtherightcolumnpresentstheepa databaseresultsforthesameyear. Thelargestchangeintheelectricityuse(Figure3.14)istherequirementforoldercoalfired powerplantstoberetiredinourcase.

113 PJ oil effnga NGA efflpg LPG electricity coal biomass Figure3.15Industrialboilersinthemodifiedbasecaseusedinthisanalysis PJ oil effnga NGA LPG electricity coal biomass Figure3.16IndustrialboilersintheEPAreleasedbasecase. Thereareadditionalefficiencyimprovementsforboilersthatareusedeveninour baserun(figure3.15v3.16).theepabasecaseonlyhasamoreefficientoptionfornatural gas.theindustrialsolarprocessheattechnologiesusedarediscussedinthemainpaper. SincetherearenocomparabletechnologiesintheEPAbasecaseafurthercomparisonis notshownhere.

114 $Additional$Results$ 'Emissions' Herewepresentemissionsresultsfromallfeecases,forcomparisonoftheeffectof feesacrosstherangeofdamageestimatesconsidered.someoftheseresultsarediscussed inthemainpaper kilotons electricity industrial transportation upstream present future low mid high low mid high vhigh mid HC+MG high rezinery residential commercial base HIP GHG combo Figure3.17NOxemissionsin2045forallcasesandin2010forthebasecase.

115 101 Figure3.18SO2emissionsin2045forallcasesandin2010forthebasecase. Figure3.19PM2.5emissionsin2045forallcasesandin2010forthebasecase.

116 102 Figure3.20VOCemissionsin2045forallcasesandin2010forthebasecase. AstheonlysectorwithVOCspecificcontrols,refineryemissionsareanimportant sourceofreductionsforvocs.inallcaseswithmidorhighhipfees,vocsfromrefineries arereduced8v11%comparedtothebasecase.industrialvocsarefairlysimilaracross cases,sometimeshigherorlowerthanthebasecase,butthelowhipfeecasedoeshave higheremissionsthantheothercases,upto14%morethanthebasecase.electricsector VOCemissionsarereducedwithallfees.

117 103 Figure3.21CH4emissionsin2045forallcasesandin2010forthebasecase 'Transportation,'Residential'and'Commercial' Thetransportationsectorisnotveryresponsivetothepoliciesmodeledhere.The policiesmodeledheremaynotbethebestonestoaffectthetransportationsystem.high hurdleratesinthetransportationsector,designedtorepresenttheconsumer shesitance tobuylessfamiliartechnologiesortospendmoreontheinitialinvestment,meanthatthe initialcostofloweremittingtechnologiesisweighedmoreheavilythanlatersavingson fueloremissionsfees.thefuturevehicletechnologyoptionsarealsoheldconstantacross allcasesinthismodel. Thecommercialsectorfuelusealsoshowslittlechange.Thereisslightlylessnatural gasusedwithghgfees,upto8%lessthanthebasecasewithveryhighghgfees.thisis duetouseofmoreefficientdevicesinthissectorandnotashiftbetweenfuels.inthe residentialsector,lesselectricityisusedwithghgfees,duetotheuseofmoreefficient

118 104 devices.withveryhighghgfeestheuseofelectricityforspaceheatingisclosertothehip feecasestooffsetthedecreaseinnaturalgasuse Industrial Petajoules Oil NG LPG FlatSolar 1000 Electricity 0 present future low mid high low mid high veryhigh mid HC+MG high ConcentratedSolar Coal base crit GHG combo Figure3.22Industrialprocessheatfuelusein2045forallcasesandin2010forthebase case.

119 105 FractionofEnergyUseCategory withcontrols LNB SCR DIF AFR IGR LNB MKF SCR SNCR ESP FF FGD NOx SO2 NOx NOx PM SO2 Boiler. Engine. ProcessHeat Hiplow Hipmid Hiphigh Combolowest Combointermediate Combolargest Figure3.23Thecontroltechnologiesusedintheindustrialsectorasafractionofthe energyusecategorythatthespecifiedcontrolisappliedto.lnbreferstolownoxburners, SCRreferstoSelectiveCatalyticReduction,DIFreferstoadryinjection/fabricfiltersystem, AFRreferstoadjustingtheairtofuelratio,IGRmeansretardingtheengine,MKFrefersto midkilnfiring,espisanelectrostaticprecipitator,ffisafabricfilter,andfgdisfluegas desulfurization. WithmidandhighHIPfees,SO2controlsareusedforprocessheatandboiler emissions.inthecombinedfeecasesthecontrolsareusedlessbecauseemissionsare reducedthroughfuelswitching.noxboilercontrolsareusedwithmidrangeandhighhip fees.withhighfeestwotypesofcontrolsareused,whileonlyoneisusedwithmidrange fees.againthereismorefuelswitchinginthecombinedfeecases,whichleadstoslightly lowerlevelsofcontroltechnologyuse,butthecontrollableemissionsaresimilaracrossfee levels.noxcontrolsarealsousedforprocessheat.withlowhipfees,themidvkilnfiring optionisused,butitisnotusedsignificantlyintheothercases.withmidrangefees(alone orcombined),sncr(selectivenonvcatalyticreduction)isusedtoremoveabout1/3of thoseemissions.withhighfees,lnb(lownoxburners)andsncrused.thescr(selective CatalyicReduction)useissimilarinallcases,buttheSNCRuseislowerinthecombined caseswheretheemissionsarelower.pmisreducedthroughtheuseofbothesp

120 106 (ElectrostaticPrecipitator)andfabricfilters.Inthelowfeecasemostofthereductions comefromfabricfilters,butasthefeesincreasefabricfiltersareusedlessandespisused more,combinedwithadecreaseincontrollableemissionsasthefeesincrease.thistrend followsforcombinedfeesaswell Petajoules petcoke oil NG 200 LPG 0 present future low mid high 5%average 3%average 2.5%average 3.5%95th lowest intermediate largest electricity coal bio base crit GHG combo Figure3.24Fuelusefor other industrialenergyneedsforallcasesin2045andforthe basecasein ElectricityGeneration Intheelectricsector,controlswereappliedinresponsetofees.Fabricfilterswere appliedtoreducepmemissions.fgd(fluegasdesulfurization)scrubbersareusedto removeso2.asthefeesonhipincrease,feweremissionsareremovedthroughcontrol technologies,becausethesetechnologiesareonlyavailableforgenerationfromcoal,which decreasesasthefeesincrease.oneexceptiontothistrendisthatscrisusedmoreinthe midrangehipfeecasethanthelowfeecase.thisisbecausethelowfeecaseusesmoreof

121 107 thelessefficientsncrtechnology.also,thecombinedfeecasesusefewercontrolsthanthe HIPfeeonlycasesforthesamereason $Sensitivity$analysis$ 'Clean'Power'Plan' GiventhatthereisuncertaintyinhowstateswillchoosetofollowtheCleanPower Plan(CPP),thereisuncertaintyintheseemissionsreductions.Thereismoreuncertaintyin thechangestotheenergysector,sowewillnotcomparetechnologiesexpectedunderthe plantotheresultspresentedhere,onlythechangesinemissions.wecomparechangesin emissionsfromtheelectricsectoralone,aswellasthetotalenergysystememissions reductions.thecppprojectsemissionsreductionsonlyfromtheelectricsectorasitisa moretargetedpolicy.theelectricsectorco2emissionsinthepolicycasespresentedhere arelowerthanprojectedintheriaforthecpp(usepa,2015)for2025and2030forall casesexceptlowandmidhipfeesand5%ghgfees.whenco2reductionsfromallsectors areconsidered,onlythelowhipfeecasehasloweremissionsreductionsthanthecpp.all oftheghgcasesandthelowhipfeecasehavelargerelectricsectornoxemissionthanthe cleanpowerplan,andonlyinthe2.5%ghgfeecaseofthosedotheemissionsreductions fromothersectorsleadtolargertotalnoxreductionsthanthecpp.theso2emissionsfrom theelectricsectorarelowerthanthancppinallcasesbutlowhipfeesand5%ghgfees. Whenreductionsfromothersectorsarecounted,thereductionsarelargerthantheCPPin allcasesbutthe5%ghgfees. TheCPPaimstoreduceCO2emissionsfromelectricitygenerationby32%from 2005levelsby2030.Asimilarreductioncouldbeachievedbyafeelevelsomewhere

122 108 betweenthe5%averageand3%averageghgfees,whichreduceco2fromtheelectric sectorby23and42%from2005levelsin2030,respectively.similarco2reductionsare alsoreachedinthemidandhighhipfeecases,whichreduceco2fromelectricity generationby21and46%from2005levelsin2030,respectively.thisprovidesfurther evidencethattheplanshouldbeabletoachievethelargecovreductionsofpollutants promisedaswellasthatthereductioninco2canbeachievedeconomically 'CCS'cost'assumptions' TheMARKALdatabaseusedherehasalowerCO2removalefficiencyfrombiomass IGCCwithCCS.TheEPAdatabaseremoves412ktCO2/PJbiomassIGCCwithCCSused, whilethemodifieddatabaseremoves142ktco2/pjbiomassigccwithccs.whentheepa databaseco2removalefficiencyisuseditmostlychangesthe3%95 th percentileghgfee case.the2.5%ghgfeecasewiththeoriginalbiomassccstechusesthattechnologyto remove60ktofco2in2030andbeyond.with3%95 th percentileghgfeesabout1800pj ofelectricityisgeneratedthiswayfrom2030on,butcloseto800megatonsofco2is sequesteredfromthetechnology.whenbiomassigccwithccsisusedwith3%95 th percentileghgfeestheelectricsectorhasanegativecontributiontoco2emissionsin2025 andbeyond,andlesselectricityisgeneratedfromotherbiomasstechnologies,coal,ngcc, solarthermal,andwind.saricaetal(2013)modifiedthebiomassrepresentationin MARKALbeyondthescopeofthispaper,andfoundthatthesechangesareimportantwhen studyingarenewablefuelstandard,butthatwithcoalandbiomasscofiringthebiomass andenergypricesaresimilar.theuseofbiofuelsistypicallysmallinthecasespresented here.

123 'Wind'and'solar'cost'and'constraints' TheinstallationandfixedO&McostofutilityscalesolarPVwasloweredtobetter matchthevaluesfromthenrel/blackandveatch(blackandveatch,2012)report.the constraintsontheuseofwindarebindinginthe3%95 th percentileghgfeecase,soif thereismorecapacityforwindinthatcaseevenmorewindmightbeused.inallcases,the assumptionsfortheavailabilityofthebestwindorsolarresourcemayhaveaneffecton howmuchoftheserenewabletechnologiesareused. 3.7ChangesDocumentation Updates$to$MARKAL$from$base$of$EPAUS9r_2014v1.1$ Downloaded'on'December'19,'2014'from'the'Environmental'Science'Connector.' References'to' EPA'database 'refer'to'this'version' Toincorporatethesechanges: The.filfileneedstobeimportedtoAnswertomakesomeconstraintswork. Therelevantupdatedworkbooksneedtobeimported $Emissions$Updates$ 'Sector'specific'classification' When emissionstypes areadded,theexistingemissionsvaluesareusedtocreate anadditionalsubsetofemissionssothatsectorspecificemissionscanbetrackedandfees canbeappliedtospecificsectors.thisdoesnotchangetheoverallemissions,butrather allowsformoretargetedfeesandmorethoroughanalysis.althoughsectorvspecific pollutanttrackingalreadyexisted,thereviseddatabasetracksalargersetofpollutants,

124 110 includingpm2.5andvocemissionsaswellasadditionalsectors.thepollutantstreatedin thismannerarenox,pm10,pm2.5,voc,so2,co2,andch4.thesectorsconsidered(and correspondingworkbooksaffected)are: E=electricity=ELC F= fuels =REF,H2,UNCNV I=industrial=IND T=transportation=TRN_LDV,TRN_HDV,TRN_OH C=commercial=COM R=residential=RES 'Upstream'emissions' SomeupstreamemissionsareaccountedforintheEPAdatabase,athoughtheyare notexplicitlydefinedasupstream.emissionsassociatedwithextractionoffossilfuelsare considered,butotherupstreamemissionsarenotincludedintheepadatabase.the modifieddatabasehasanexpandedtreatmentofupstreamemissionstoensurethat decisionsinthemodelconsiderallemissionsassociatedwithatechnology.usingliterature sourcesandemissionsvaluesalreadyintheepadatabase,upstreamemissionsare explicitlyaccountedforinthisversionofmarkal.wheretheepadatabasedidnot accountfortheseupstreamemissions,aliteraturesearchwasperformedtoaddinthese emissionsvalues.thisallowsupstreamemissionstobetrackedseparatelyandforfeesto beappliedtothatemissionscategoryseparately.upstreamemissionsaredefinedforcoal, naturalgas,andoilextraction,biomassproduction,andtheindustrial,electricpower, residential,andcommercialsectorsfortechnologiesthatdonothaveupstream representationinthemodel,suchasrenewabletechnologieswithoutafuelextraction

125 111 pathway.thelastfourscenarioshaveupstreamemissionsmostlyforrenewable generationtechnologieswherethereisnotafuelpathwaywheretheaccountingcanbe done. Table3.4Theupstreamemissionsaddedbytechnologyandpollutant.Allvaluesarein kt/pjandvalueswithagreybackgroundareco2equivalentsbecauseseparatech4and CO2valueswerenotavailable.Thistabledoesnotincludeupstreamemissionsthatare includedintheepadatabase,butdoesincludethosefromthesesources:(america s EnergyFuturePanelonElectricityfromRenewableResourcesandNationalResearch Council,2010;ArvesenandHertwich,2012;Burkhardtetal.,2012;Kaplanetal.,2009; KoroneosandNanaki,2012;NewEnergyExternalitiesDevelopmentforSustainability, 2008;SantoyoVCastelazoetal.,2011;SolliandReenaas,2009;Wangetal.,2012). Thevaluesforupstreamemissionsthatwereaddedtothedatabaseareshownin Table3.4.Notethatfortwooftheliteraturesources,theupstreamGHGemissionsareonly givenintermsofco2veandnotseparateco2andmethane(ch4)values.allvaluesinthis tableareinkt/pj.alsothevaluesshownfor(kaplanetal.,2009)arefulllifecyclevalues, buttheaddedupstreamvaluesarethetablevalueslesstheexistingcombustionemissions values.formoreonthebiomassemissionsseebelow.

126 112 Otheremissionschangesincludeachangeintheemissionsofupstreamcoal methaneto0.152kt/pj(venkatesh,2011),andamodificationofupstreamnaturalgas valuesbasedonmcleod(2014).theupstreamemissionsconsideredhereonlyconsider emissionsfromfuelextraction,processinganddelivery.thiswouldincludethefuel pathwayofgasoline,butnotthevehiclethatusesit.productionofasolarcollectoris consideredaspartofthefuelrelatedemissionsbecausetheseemissionsareconsideredto besimilartoextraction,whereasthemanufactureofavehicleisrelatedtotheenergyuse, notthecollectionofenergy.upstreamemissionsfortheconstructionofcoalandnatural gascombustionfacilitiesarenotincluded GeneralProcedure Upstreamemissionsareaccountedforintheupstreamfuelpathway,whereone exists.theepadatabasehassomeexistingupstreamemissions,sowherethoseemissions arealreadypresent,thesamevalueswereusedinaduplicateemissionsparameterending in*utodenoteupstreamemissions.forrenewablegenerationtechnologieswherethereis notafuelpathwaywheretheaccountingcanbedone,theupstreamemissionsare accountedforinthedefinitionoftheenergyconversiontechnology.also,forthese technologiesthespecifictechnologycanbemoreimportantindeterminingtheupstream emissionsastheconstructionofthetechnology(forexampletheconstructionofapvpanel versusaparabolictrough)isthemajorsourceoftheupstreamemissionsandcanvary quiteabitfordifferenttechnologiesusingthesameenergysource.whennewemissions valueswereadded,theemissionswereaddedtotheupstreamaccountingandtheoverall emissionsaccountingtoensurethatfeesareappliedcorrectlyinallcases.ingeneral,the addedupstreamemissionsarerelatedtorenewableandunconventionaltechnologiesor

127 113 lesscommonfuelsthathadlessrobustupstreamcharacterizationintheexistingmodel. Theaddedupstreamemissionsvaluesandtheliteraturesourcesarepresentedinthetable above. Theupstreamemissionsconsideredhereonlyconsideremissionsfromfuel extraction,processinganddelivery.thiswouldincludethefuelpathwayofgasoline,but notthevehiclethatusesit.productionofasolarcollectorisconsideredaspartofthefuel relatedemissionsbecausetheseemissionsareconsideredtobesimilartoextraction, whereasthemanufactureofavehicleisrelatedtotheenergyuse,notthecollectionof energy.theconstructionofcoalandnaturalgascombustionfacilitiesisnotincludedinthe upstreamemissionsvalues Coal ForcoalweusetheexistingemissionsinMARKAL,withonechangefromthe2014 v1.1release.weareusingthevalue0.152kt/pjformethaneemissionsfromcoal extractionacrosstheboard.thisnumberistakenfrom UncertaintyinLifeCycleGHG EmissionsfromUSCoal (Venkatesh,2011)asrecommendedinan . 3 & Geothermal Althoughthevaluesusedarenotaperfectrepresentationofallsources,these emissionscanvaryamonggeologicformationsandthesantoyovcastelazoetal.(2011) valueswereusedtorepresentthatthereareassociatedupstreamemissions.duetothe coarsespatialresolutioninmarkal,itisnotthecorrecttooltochoosewhichgeothermal locationswouldbebestchoicetobothmeetelectricitydemandandreduceemissions. 3 Personal correspondence with Carol Lenox May 28, 2015

128 NaturalGas TheemissionsfornaturalgasextractionhavebeenupdatedcomparedtotheEPA databaserelease.anotherresearcherworkingwithus9regionmarkalhasalteredthe naturalgasextractionemissionstobetterrepresentthedifferencesbetweenshalegasand conventionalresourceextraction(mcleod,2014),andthosechangesareincorporatedinto thedatabaseusedhere. TheEPA9Vregiondatabasehasonlyasinglepathwayfornaturalgasanddoesnot separateshaleandconventionalresources.themodifiednaturalgasrepresentation estimatesshalegasasafractionoftotalnaturalgasproductionbyregionbasedon projectionsfromihsglobalinsight(larsonetal.,2012)andaeo2013(energy InformationAdministration,2013).Revisedemissionsfactorsforupstreamnaturalgas wereused.asinglesourceisstillmodeledfornaturalgasextractionineachregion,butthe emissionsfactorswereweightedbyregionalshalegasproductionpercentages. Theseproductionpercentageshadtobespecifiedforeachtimestepinthemodel,so modelingresultsfromtwootherstudieswereusedinthecalculations:unconventionalgas productionforecaststo2035byihsglobalinsight(larsonetal.,2012),andtotaldryng productionforecastsfromeia saeo2013(energyinformationadministration,2013).in 2010,shalegasproductionpercentageswerederivedfromEIANaturalGasGross Withdrawalsdata:TriVstate(R2):80%;Greatlakes(R3):50%;Midwest(R4):24%;South Atlantic(R5):44%;EastGulf(R6):0%;Texas&WestGulf(R7):41%;RockyMountain (R8):6%;Pacific&Alaska(R9):3%.Thesepercentagesrepresentthepercentageoftotal NGproductionineachregionfromshalegas.Growthinshalegasproductionwasprojected

129 115 andincludedinthemodel.thegrowthrepresentssteadyincreasesthatlevelingoffinshale gasproductionfraction. CO2andCH4emissionsvaluesarederivedfromWeberandClavin(2012),and distinctvaluesareusedforconventionalandshalegas.thenox,voc,so2,andco emissionsfactorsarederivedfromresultsofthewestvwidejumpstartairqualitymodeling Study(ENVIRONInternationalCorporation,2013),whichcoversthemainenergyV producingbasinsintherockymountainregion.theproductionvweightedaverageof emissionsperunitofproductionacrossthesebasinswasassumedtoapplyacrossthe country. FutureemissionsareaffectedbyNewSourcePerformanceStandards(NSPS)and NationalEmissionsStandardsforHazardousAirPollutants(NESHAP)rules(Macpherson, 2012)finalizedin2012foroilandgasproduction,whichareexpectedtosignificantly reducevocandch4emissionsassociatedwithupstreamnaturalgasproduction (Macpherson,2012;U.S.EPA,2012a).Thetechnicalsupportdocumentsfortherules provideestimatesofemissionsreductionsassociatedwitheachrule.emissionsreductions werecalculatedfrominformationinthetechnicalsupportdocumentsandextendedto 2030usingastraightlinephaseVin.Linearinterpolationwasusedtocalculatereductions fortheinterveningtimeperiods.after2035theemissionsfactorswereheldconstant, assumingthattheeffectsoftheregulationswillbefullyaccountedforbythatpoint.more detailsaboutadjustingemissionsfactorstorepresenttheincreaseinhydraulicfracturing canbefoundinmcleod(2014).

130 'Commercial'and'Residential'Sectors' Changesmadeinthecommercialandresidentialsectorincludetheupstream emissionsandsectorvspecificemissionsdescribedabove.solarwaterheatersand photovoltaicpanelsarethecommercialtechnologiesthatrequiredupstreamemissions. Somezerovalueswerealsoaddedtotheresidualtechnologiestofixanissuewith importingtheworkbooktothedatabase 'Biomass'CO2'Uptake' AnothersetofemissionsfactorswasaddedtothedatabasetoaccountforCO2 uptakefrombiomassgrowth.theseco2ubemissionsareaccountedforonbiomass collectortechnologies,andthisaccountingwasnotincludedintheepadatabase.these valueswerederivedfromwangetal.(2012).uptakeemissionsareonlyapplicableto biomassfromstoverandagriculturalresidue,notcorn.theseemissionsarerepresentedas negativeco2emissionsandpositiveco2ubemissions.theco2ubemissiontypeserves twopurposes:firstthatthespecificuptakeemissionscanbeanalyzed,andsecondthat emissionsfeescanbeappliedtoco2uwithoutcausingerrorsinmarkal. ForeachMARKALbiomassfeedstockcollectortechnology,(XCBCRN,XCBSTV, XCBAGR),theemissionsforlandusechange(LUC),dieselfueluse,andnaturalgasuseare addedtogethertodeterminethetotalupstreamemissionvalueofthatfuel.theemissions areshownintable3.5.theseemissionsfactorsarederivedfromwangetal.(2012)and includeemissionsfromdieselusefromagriculturalequipment,naturalgasusedtocreate fertilizer,andemissionsassociatedwithlandusechange.forthefuelsshowninthetable, theemissionsareaddedtothedatabase,butthefueluseitselfisnot.thelifecycle

131 117 emissionsareaddedastotaland*uemissions,asidefromtheuptakeemissionsdiscussed above. Feedstock productioncollection energy Fuel CO2 VOC NOx PM10 PM25 SO2 CH4 CO2U CO2UB PJ/Mt t/t kt/mt && LUC && diesel && corn NG && Implemented Values && Feedstock LUC && productioncollection energy diesel && corn stover NG && Implemented Values Feedstock LUC && productioncollection energy diesel && ag residues - other NG && Implemented Values Table3.5TheEmissionsvaluesimplementedinthemodifiedversionofMARKALfor biomassgrowth,aswellastheintermediatevalues.lucstandsforlandusechange,ng standsfornaturalgas.thefuelusevaluesareusedasintermediatevaluestocalculate emissions,butthefuelusedingrowingbiomassisnotconsideredinthemarkalfuel pathway.co2ubreferstotheco2uptakefrombiomassgrowth.allemissionsexceptfor CO2areinkt/Mtbiomass,whileCO2isrepresentedastonsofCO2pertonofbiomass.The CO2UandCO2UBparametersareinkt/Mt. Additionally,CO2uptakenegativeemissionsof7.61kt/MtderivedfromWangetal. (2012)wereaddedtoaccountforCO2uptakefrombiomassgrowthfromstoverand agriculturalresidue.uptakeemissionsarenotapplicableforcorn.thisemissiontype allowsuptakeemissionstobeanalyzed,andalsoallowsghgfeestobeappliedwithout causingerrors.toaccountforghgfees,asubsidywasappliedtogrowthofstoverand agriculturalresidue,asshownintable3.6.

132 118 Table3.6SubsidyforbiomassCO2uptakeinmillion$perMegatonofbiomass. 3%95th 2.5%avg 3%avg 5%avg E0.7806& E0.4153& E0.2721& E0.0859& 2015 E0.9238& E0.4655& E0.3079& E0.0859& 2020 E1.0312& E0.5013& E0.3437& E0.1003& 2025 E1.1386& E0.5442& E0.3724& E0.1146& 2030 E1.2603& E0.5800& E0.4082& E0.1361& 2035 E1.3749& E0.6230& E0.4440& E0.1504& 2040 E1.4752& E0.6588& E0.4726& E0.1719& 2045 E1.5826& E0.7018& E0.5084& E0.1933& $Refineries$ 'Fuel'Emission'type' TheEPAdatabasewasmodifiedtoapplythe fuel emissionscategorytoemissions fromrefineries,h2production,andunconventionalenergyproductionsuchasacoalto liquidsplant.thisincludedredefiningsome*iindustrialemissionsas*f.thisdistinction wasmadebecausetheseemissionssourcescouldbeconsideredaseitherupstreamor industrial.theemissionsthatwerepreviouslyconsideredasindustrialemissionsarenow consideredinanewemissiontypewiththesamevalues 'Control'Technologies' Emissionscontroloptionsarealsoaddedforrefineries.Controloptionsaddedwere determinedbasedoninformationinthemidvatlanticregionalairmanagementassociation report(marama,2007).awetscrubberoptiononthefluidcatalyticcrackingunit (FCCU)providestheSO2andPMcombinedcontrol;twoNOxreductionoptions,oneeachon thefccuandboilerareadded,andadvancedleakdetectionandrepair(ldar)techniques

133 119 arerepresentedtoreducevocemissions.refineryefficiencyimprovementswerenot addedbecauseiwasunabletofinddataonefficiencyimprovementsthatare technologicallyavailablebutnotalreadycommonlyinplace $Old$Coal$ Anadditionalscenariowasaddedtoensurethatoldercoalfiredpowerplantswere retiredaftertheyhadbeeninoperationfor~75years.asetoffilterswascreatedtodefine coalbydecade.asetofconstraintsusesthosefilterstoretireeachdecade sinvestmentat theappropriatetimestep.forexample,coalegusbuiltinthe1940sarenolongerallowed tobeusedstartingin2025.(noteforthosetryingtousethisdatabaseversion:thefilters areimportable,buttheversionoftheelectricityscenarioincludedheredoesnotinclude theconstraints.ifthisisadesiredchange,icanprovideinstructionsoradifferent workbookthatdoes.) 3.7.4$Electricity$ ChangesmadeintheelectricsectorincludesectorVspecificemissionsdefinitionsand upstreamemissionsforwaste,hydropower,geothermal,wind,solar,andnuclearelectricity generation.costinformationwasalsoupdatedforsolarphotovoltaics.onecarboncapture andsequestrationtechnologywasalsoaltered 'Biomass'CCS WechangedtheCO2removalefficiencyforbiomassIGCCwithCCS.Inboththe modifiedandepaversionsofthedatabase,biomassco2fromcombustionisassumedequal touptake.thismeansthatthecarboncapturedbyccsonbiomassisconsiderednegative CO2emissions.IntheEPAreleaseofthedatabase,theCO2removedfrombiomassIGCC

134 120 withccsisabouttwicethatofcoal,duetothelowcombustionefficiencyofbiomass.we havealteredtheco2removalratebasedonthekgc/kwhrategiveninrhodesandkeith (2005)andconfirmedbyIPCCnumbers(Abanadesetal.,2005).TheEPAdatabaseremoves 412ktCO2/PJbiomassIGCCwithCCSused,whilethemodifieddatabaseremoves142kt CO2/PJbiomassIGCCwithCCS.Asthistechnologyisstillnew,however,thisassumption shouldstillbeexamined.wealsoresearchedcostassumptions,anddecidedthatkeeping thecostusedintheepadatabasewiththemoremodestco2removalratefitbestwiththe literature. SincethepolicymechanismweareusingincludesfeesonCO2emissions,this technologycanhavealargeeffectonresults,becausealargeenoughco2feecouldleadto theebioigcccstechnologytohaveanegativenetcosteveniftheelectricitygenerated fromthetechnologyisnotlarge.thisiswhywehavepaidparticularattentiontothis technology 'Solar'PV'cost$ (Note:iflookingforchangeswithintheworkbooks:thesechangeswerenotmadein animportedworksheet,butinacalculationspage.changesweremadeintheelectric sectorworkbookonthesolarrawdatapage,row25.) ThebasePVcostin$/kWwaschangedfromtheEPAdatabase.Foreachregion, class,costcategorycombinationthereisacostaddertodeterminetheactualcostofsolar PVinvestment.Thecostwaschangedtothevaluesbelowbasedontheaverage,centralized installationcostfromthenrel/blackandveatch(blackandveatch,2012)report convertedto2005usd.thisrepresentsalowerinstallationcostthanintheepadatabase. Costswerenotchangedinresidentialandcommercialsectors,becauseinthosesectorsthe

135 121 investmentcostwassimilartothenrelvalues.thecostwasnotchangedforcspbecause thecspcostswerealsosimilartothoseinthenrelreport.thepvfixomparameterinthe electricsectorwasalsochangedto37.57$/kwvyearandbasedontheaverageacross yearsfromtheblack&veatchcomparisons. Table3.7ThemodifiedinvestmentcostsvaluesforsolarPVelectricitygenerationin$/kW ofcapacity. Year Investment Cost ($/kw) 'Electricity'trade' TheINVCOSTparameterforelectricityimportinfrastructure(fromMexicoand Canada)andtheINVCOSTofdomesticelectricitytradeinfrastructurewasraisedto$1500. ThischangewasoriginallyappliedbyMcLeod(2014);wehaveretaineditwiththenew versionoftheworkbook.thischangeistorepresentincreasingthecostofnewelectricity transmissioncapacitytomatchassumptionsfromnrel(nationalrenewableenergy Laboratory,2012) $Industrial$Sector$Changes$ TheindustrialsectorcontainsmostofthechangescomparedtotheEPAdatabase.In additiontothetypicalsectorvspecificandupstreamemissions,furthercontroltechnologies andenergyconversiontechnologieswereadded.severalemissionsreductionoptionshave beenaddedtothisversionofthemarkaldatabase,butthefullspectrumofpossible responsesisnotrepresented.thisisdueinlargeparttotheveryinhomogeneousnatureof theindustrialsectorandtheroughresolutionofthemodel.sincemanyemissioncontrol

136 122 andefficiencyimprovementsarenotavailableforallindustrialfacilities,theycannotbe consideredinmarkal.however,wethinkthemodificationsprovideamore representativepictureoftypesofresponsesavailable(i.e.,fuelswitching,efficiency improvements,controltechnologies),allowingthemodeltorespondmorefully 'Efficient'boilers' Thereissomerepresentationofindustrialefficiencyimprovementsintheindustrial sectorintheepadatabase,butitislimited.inordertomodelamorerobustindustrial system,wehaveaddedmoreenergyefficiencytechnologiesinparalleltotheexisting technologies.efficiencyimprovementswereaddedtoindustrialboilers.theefficiency improvementoptionrepresentedisbasedonoptimizationoftheboiler,buttherangeof costsandimprovementsassociatedwithoptimizationaresimilartotherangesassociated with reducingslaggingandfoulingofheattransfersurfaces. Optimizationrefersto testingtheboilerandestablishingtheparameters,suchastemperatureandairflow,under whichtheboilerwillproducethemostenergyoutputperenergyinput.therepresentative optioncouldrepresenteitheroptimizationorreducedfoulingofheattransfersurfaces beingimplementedonanindividualboiler.thisimprovesefficiencybyonepercentage pointandtheassociatedcapitalcostis1.082millionusdperpetajoule.thisefficiency improvementreducesemissionsbecauseemissionsaredefinedperpjoffuelusedfor industrialboilers.thismeasureisassumedtobeaonetimeactionsothereisnooperation andmaintenancecost.thisoptionisavailableasaretrofittechnologythattakesaninputof.99pjoffuelandoutputs1pjoffuelorasanewboilerwhichhasaheatrateonepercentage pointlowerthantheoriginalheatratebutwiththesamelifetimeando&mcostsasthe existingboileroptions,butwiththecapitalcostincreasedby1.082m$/pj.althoughthe

137 123 retrofitefficiencyimprovementisslightlylessthanonepercentagepoint,theefficiency improvementiswithintherangesuggestedintheepawhitepaper,andretrofittingan existingboilermaynotbeabletoreachthesameefficiencyasbetterinitialplanningina newboiler.thisdataisfromawhitepaperbytheepaonghgreductionmethods(usepa, 2010).ThecostweimplementinMARKALisoneofthehighervaluesinthewhitepaper, becausethepaperreportedcostsforfacilitiesthathavealreadyoptimizedtheirboilers, andthisismorelikelytohavebeendoneatfacilitieswherethecostwaslower. BecausetheICIboilerMACTrulerequiresanannualtuneVupfornaturalgasboilers inlieuofemissionslimits,nomoreefficienttechnologieswereaddedforthatfuel.also, efficientboilerswerenotaddedwheretheactivityleveloftheexistingtechnologywaslow inthebasecase.whenanewboilerisneeded,thereareefficientandstandardoptions. Whenanexistingboilerisbeingused,thereisapassthroughoptionthatcontinuesuseof theboilerasisandaretrofitoptionthatimprovestheefficiencyatacost.thenaming conventionfollowstheepadatabasetechnologies,butthefourthcharacterisrforretrofit oruforupgrade(insteadofnforneworeforexisting).thestartdate,lifetime,capunit, discrate,andafparametersarebasedontechnologiesdefinedintheepadatabase. RetrofitandretrofitpassthroughtechnologiesdonotneedanAFtobedefined,because thosetechnologiesareaddvonstotheexistingtechnology.fornewandupgraded technologies,the(fixedandvariable)operationandmaintenancecostsarethesameasfor theregulartechnologies,andfortheretrofittechnology,thosecostsareaccountedforin theexistingtechnology.thetechnologypathwayisasfollows:retrofitcommodityfuelin retrofitorpassthroughinterimcommodityepatechnologyoutenergy.

138 'Industrial'solar Thereispotentialforsolarheattobeusedintheindustrialsector.AlthoughtheUS currentlydoesnotutilizethistechnologyverymuch,othercountrieshavefoundsolar energytobeacostefficientsourceofindustrialheat(islametal.,2013).industrialsolar technologiesarenotrepresentedintheepadatabase,butiaddedtwotypesofsolarheat; flatplatesolar,whichsatisfieslowertemperatureheatneeds,andparabolictroughsolar, whichcanbeusedforhighertemperatureheatdemandbutismoreexpensive.theflat platetechnologywascreatedbasedontheflatplatesolarheattechnologyavailableinthe commercialsector.theparabolictroughtechnologyoptionwasdefinedinpartfromdata fromthesystemadvisormodel(blairetal.,2014)forelectricparabolictrough,withthe investmentcostbasedonapierdemonstrationfacilityincalifornia(rubyandamerican EnergyAssets,CaliforniaL.P.,2012).Theuseofthesetechnologiesisconstrained,because solarthermalenergyrequiresspaceandcertaintemperaturedemands.theconstraints implementedwerebasedonlauterbachetal.(2012)theconstraintsaredefinedasthe maximumpercentageofprocessheatthatthetechnologycouldsatisfyforeachindustrial subvsector,andthevaluesaredefinedbelow.hurdleratesforthistechnologyaresetto 0.20basedonevaluationofelectric,residential,andcommercialsectorhurdleratesfor solartechnologies.theupstreamemissionsfactorsforthesetechnologiesaretakenfroma NEEDSreportonsolarthermalpowerplants(NewEnergyExternalitiesDevelopmentfor Sustainability,2008)forcriteriapollutantsandfromBurkhardtetal.(2012)forGHGs.

139 125 Table3.8Themultipliersusedtodefineconstraintsonparabolictroughsolarheatingused intheindustrialsector. Constraint Sector Abv. multiplier Food FD 0.04 Pulp PL 0.15 Paper PA 0.15 Paperboard PB 0.15 Otherpaper PO 0.15 Organic chemicals CO 0.04 Inorganic chemicals CI 0.04 Plastic,fiber, resin CP 0.13 Agchemicals CA 0.04 Other chemicals CT 0.04 Theconstraintsfortheparabolictroughheatweredeterminedbymultiplyingthe sectorspecificmultiplierabove(determinedfromlauterbachetal.(2012))bythe industrialdemandforthesectorandregionandbythe%ofprocessheatforthatsector andregion.theconstraintmultipliervalues(intable3.8)includea0.4multiplierto representtheassumptionthatonly40%ofindustrialfacilitieswiththeappropriateheat demandhavethespaceandabilitytoinstallaconcentratingsolarstructure.further determinationofappropriatesectorsandtemperaturevaluesisdescribedinlauterbachet al.(2012).theflatplatesolarthermalisonlyallowedinthefoodsectorbecauseofthelow temperaturerequiredinthatsector.theconstraintforthatsectoris0.08multipliedbythe industrialdemandmultipliedbythepercentageofprocessheatinthesector.these constraintsweredeterminedtolimittheuseofsolarprocessheattofacilitiesthatcouldget bywithonlysolarthermal,becausetheeconomicsofacombinedsystemwouldbe different.solarisonlyallowedinindustrieswhereweknowfromtheliteraturethatitis

140 126 feasible,becausesomesectorsrequirehighertemperaturesthanthistechnologycan achieve 'Control'Technologies' IndustrialenergyuseinMARKALincludesboiler,electrochemical,feedstock, machinedrive,processheat,facility,andother.ihaveaddedemissionscontrolstothe boilerandprocessheatenergyusebutsuchcontrolsarenotapplicableforelectrochemical energyorforfuelsusedasfeedstock.thefacilityenergyuseandotherenergyuse categoriesaretoodiversetoaddcontroltechnologies;theenergyusedinthese technologies (asatechnologyisdefinedinmarkal)includesawidevarietyofenergy use.manyoftheseusesdonothaveapplicablecontrolsandthenumberofdifferent technologiesincludedundertheseumbrellasdoesnothaveanyuniversallyapplicable controltechnologies ThetechnologiesaddedarebasedonCoSTmodelingdonebyJuliaGamasattheEPA (Gamas,2015).Thesecontroltechnologieswerecomparedwiththetechnologiesin MARKALtoseewhichavailablecontrolsfitintotheMARKALframeworkandarenot alreadyassumedtobeinplace.mostcontrolsareaddedtoprocessheatforaspecificsector orboilers.onlycontrolsthatcouldbemappedtotechnologiesexplicitlymodeledin MARKALwereaddedandonlyfortheindustrialsector.NoVOCcontrolswereadded becausethecontrollablesourcesdon tfitwellwiththetechnologiesinmarkal.for boilerssubjecttotheboilermactregulationsorforwhichothercontrolsareassumedin theepadatabase,additionalcontrolswerenotmodeledonaffectedpollutants,withthe exceptionthatinsomecaseslnbwasaddedtoboilersbuts(n)crcontrolscouldstillbe applied.nopmcontrolswereaddedtoboilersbecauseifthesecontrolswerefeasiblethey

141 127 wouldhavealreadybeenaddedtocomplywiththemactregulations.additionalso2 controlsshouldbeavoidedifwetscrubbersarealreadyused,basedontable100inthe BoilerMACTworksheetoftheINDworkbook. Aconstraintwasaddedtolimitcontrolsto80%ofthepossiblelevelforall industrialcontrolsbecausetherearelikelyasmallnumberoffacilitiesthatcannotor wouldnotapplycontrolsthataregenerallyapplicablewithinatechnologycategory.when thetechnologieswereapplied,thecostwasdefinedasavarombasedontheaverageof theann_cost_per_tonoutputfromcost. Thecontrolframeworkforcontroloptions(exceptcementprocessheat,whichis slightlydifferentanddescribedabove)is: ExistingMARKALtechnologypreVcontrolcommodityNOxcontroloptionsinterim commodityso2controloptionsinterimcommodity2pmcontroloptionsoriginal MARKALoutputcommodity Options are2v5technologiesincludingapassthroughtechnologyoption. Noteverypathwaywillincludeallsteps,becausenotallemissionscontrolsarevalid foralltechnologies. Acontroloptionwillbedefinedwithanegativeemissionsfactorandcostsbasedon thecostfile. Allcontrolsbecomeavailablein2015witha40yearlifetime. Eachcontroloptionwillbedefinedforaspecific ExistingMARKALtechnology becausedifferentfuelshavedifferentemissionsfactorsanddifferentindustrialsubv sectorsneeddifferentcommodityoutputs.

142 Applicability InthedatabaseofcontroltechnologiesweareusingfromtheCoSTmodel,EPA eliminatescontrolswherethecostpertonofemissionreductionisabovesomethreshold. Manysmallsourcesofemissionsarenotincludedinthepoolofcontrollablesources.For thisreasonrulepenetrationlimitsareaddedtoensurethatcheapcontrolsarenotbeing addedinsituationswheretheydonotexist.somesourcesarejustnotincludedas technologiesthatcanbecontrolledinmarkal,i.e. areasource boilersand microv turbines. Additionally,technologieswereconstrainedsothatonly80%ofapplicable sourcescouldbecontrolled.thiswasdonebycreatingfiltersoncontrolcategories(e.g. NOxboilercontrolsnotincludingLNB)andcontrollabletechnologies(e.g.boilerstowhich controlscouldbeapplied)anddefiningrulevbasedconstraintsthatlimitthecontrolstobe 80%oftheenergyconversiontechnologies. Forboilersthatarealreadysubjecttoemissionscontrols,additionalcontroloptions maynotbeavailable.exceptionsincludengandlpgvfueledboilers,forwhichonlynox emissionsareaffectedbymactrelatedcontrols,socontrolscanbeapplied(allnewng alreadyhaslnbsothatoptionisstillnotavailable.so2controlscanbeappliedexceptfor coalandtomlinsonblackliquorboilers. PMboilercontrolswillnotbeaddedbecausetheboilerMACTstandardsalready takecareofthis.lnbisalreadyinstalledonnewngandallboilerssubjecttothemact rule,sowillnotbeaddedasanewcontrol.furtherso2controlswon tbeaddedoncoalor TomlinsonboilerssubjecttoMACTbecausetheyarealreadycontrolled. Thecontrolsandcontrollabletechnologiesaredetailedinthetablesbelow.

143 BoilerControls AFR airfuelratio appliestoicegas IGR ignitionretard appliestoicegas,iceoil,regoil LNB lownoxburner appliestongcct BSI biosolidinjection appliestocementph MKF midkilnfiring appliestocementph S(N)CRselective(non)catalyticreduction appliestocementph CPH culletpreheat appliestoglassph LNB lownoxburner appliestoglassph OXY oxyfiring appliestoglassph SCR selectivecatalyticreductionappliestoglassph Table3.9NO xcontrolnaming.icestandsforinternalcombustionengine,phstandsfor processheat,regreferstoreciprocatingengine,ngrepresentsnaturalgas,andcctrefers tocombustionturbines. Constraint$Naming$ Filters Boilers: Table3.10Theboilercontrolsandconversiontechnologiestowhichtheyareapplied.The* referstothe2lettersectordesignationsusedintheepareleaseofmarkal,e.g.fdforthe foodsubsector.filtersweredesignedtoapplytheconstraintswithnamesasfollows.filter names:coabolcon,coabollnb,coabolnox,coabolso2;rflbolcon,rflbollnb, RFLBOLNOX,RFLBOLSO2;DSTBOLCON,DSTBOLLNB,DSTBOLNOX,DSTBOLSO2; NGBOLCON,NGBOLLNB,NGBOLNOX. Fuel Conversiontech LNBcontrols NOxcontrols SO2controls Coal Residualoil Distilateoil NaturalGas I*BOLCOA, I*BPVCOA, I*BFBCOA, I*BSOCOA I*BOLRFL, I*BHLRFL I*BOLDST, I*BLLDST I*BSPNGA, I*BOLNGA S*BOCLNB S*BORLNB S*BODLNB S*BONLNB S*BOCSCR, S*BOCSNR S*BORSCR, S*BORSNR S*BODSCR, S*BODSNR S*BONSCR, S*BONSNR S*BOCDIF S*BORDIF, S*BORWET, S*BHRWET S*BODWET, S*BLDWET NA

144 130 CCT:Thenamesforcombustionturbinesfollowthispattern,asforothernamesthe* representsthetwolettercodefortheindustrialsubsector.energyconversion Technologies:I*CCTNGA;ControlTechnologies:S*CTNLNB;filternamesCCTNGA,CCTLNB. REG Table3.11Theenginecontrolsgroupedbyfueltype,whichareconstrainedbythe followingfilters:regrfl,regdst,regnga,regoil,reglpg;regctrlrfl, REGCTRLDST,REGCTRLNG,REGCTRLOIL,REGCTRLLPG. fuel Conversiontech Controltechs(AFR andigr) resid I*REGRFL S*EGR* dist I*REGDST S*EGD* NG I*REGNGA S*EGN* oil I*REGOIL S*EGO* LPG I*REGLPG S*EGL* $ BST$ Table3.12Thecontroltechnologiesforsteamturbinesbyfuelandconversion technologies.asforothernames,the*representsthetwolettercodeassociatedwitheach industrialsubsector.thefilternamesassociatedwiththistableare:rflbst,rflbstlnb, RFLBSTNOX,RFLBSTSO2;DSTBST,DSTBSTLNB,DSTBSTNOX,DSTBSTSO2;NGBST, NGBSTLNB,NGBSTNOX;COABST,COABSTLNB,COABSTNOX,COABSTSO2;LPGBST, LPGBSTLNB,LPGBSTNOX,LPGBSTSO2;OILBST,OILBSTLNB,OILBSTNOX,OILBSTSO2. Fuel Conversiontech LNBcontrol NOxcontrol SO2control Residualoil I*BSTRFL, I*CHLRFL S*BCRLNB S*BCRSCR, S*BCRSNR Distilate I*BSTDST, I*CLLDST S*BCDLNB S*BCDSCR, S*BCDSNR NaturalGas I*BSTNGA S*BCNLNB S*BCNSCR, S*BCNSNR Coal I*BSTCOA, S*BCCLNB S*BCCSCR, I*CPBCOA, S*BCCSNR I*CFBCOA LPG I*BSTLPG S*BCLLNB S*BCLSCR, S*BCLSNR Oil I*BSTOIL S*BCOLNB S*BCOSCR, S*BCOSNR S*CHRWET, S*BSRWET, S*BSRDIF S*CLDWET, S*BSDWET S*BSCDIF S*BSLWET S*BSOWET

145 131 Process$Heat$controls$ Table3.13Thecontrolsforindustrialprocessheatbasedonconversiontechnologyand industrialsubsector(category)towhichtheyareapplied.forthistablethefilternamesare shownwithinthetableitself.forprocessheatapplicabilityvariesbyindustrialsubsector, butisapplicabletoallcombustionfuelswithinthesubsector.electricityandconcentrated solarpowerarenotcombustionfuelsandthereforethecontroltechnologiesarenot applicabletoprocessheatusingthesefuels. Category' tech' Tech'filter' control'tech' Control'Filter' PaperSO2 IP*PRH*VELC,V IPPH SP*FGD IPPHFGD CSP CementSO2 SINDPN*CO2,V INCPH SNC*FGD INCPHFGD SINDPNECO2 Othernonmetal INOEPRH*VELC INOPH SNO*FGD INOPHFGD SO2 PaperPM ChemicalPM CementPM Othernonmetal PM SteelPM OthermetalPM CementNOx IP*PRH*VELC,V CSPorPTC (repeatedfilter) IC*PRH*VELC,V CSP SINDPN*CO2 (repeatedfilter) INOEPRH*VELC (repeatedfilter) IMS*PRH*VELC, IMT*PRH*VELC IMA*PRH*VELC, IML*PRH*VELC, IMO*PRH*VELC SINDPN*CO2 (repeatedfilter) IPPH SP*ESP IPPHESP ICPH SC*ESP ICPHESP INCPH SNC*FFF INCPHFF INOPH SNO*FFF INOPHFF IMSPH IMPH INCPH SMS*ESP, SMS*FFF, SMT*ESP, SMT*FFF SMA*FFF, SML*FFF, SMO*FFF SNCPH*BSI, SNCPH*MKF, SNCPH*SCR, SNCPH*SNR IMSPHPM IMPHPM INCPHNOX GlassSO2 INGEPRH*VELC INGPH SNGEPR*FGD INGPHSO2 GlassNOx INGEPRH*VELC INGPH INGPHNOX (repeatedfilter) SNGPH*CPH, SNGPH*OXY, SNGPH*SCR, SNGPH*LNB

146 132 DifferentPMcontrolsbeingusedmaynotindicateachoiceasmuchastheyindicate optionsinparticularsubsectors.alsothepercentageofcontrollablepm10removedcanbe greaterthan80%becausetheconstraintisn tontheemissions(it sonactivity) 'Cement'CCS$$ CarbonCaptureandSequestrationcontroltechnologyoptionswereaddedtothe industrialsectorforcementprocessheat.theemissionsforcementprocessheatwerealso alteredtotakeintoaccountthelargeportionofco2thatoccursduetocalcinationin additiontotheco2emissionsrelatedtofuelcombustion.accountingfortheseemissionsis important,becauseeventhoughtheyarenotstrictlyenergyrelatedemissions,thebenefit ofremovingtheseemissionsmayaltertheeconomicsofusingccsinthecementindustry. TheexistingCO2emissionsforcementprocessheatweremultipliedby3forthe controllabletechnologies,becausetheieatechnologyroadmap(internationalenergy Agency,2009)saysthatcalcinationemissionsare60V65%oftotalemissionswhilefuel combustiongeneratestherest.co2emissionswhentheprocessheatiscreatedusing electricityweredeterminedbasedontheemissionsfortheotherfuels,2/3*averageofco2 fortheothertechnologies. TheenergycarriersaddedtosupportthisinclusionarenamedICCS_*.Thepathway inmarkalisasfollows:indenergyemisaccountingplaceholderenergyptor CCSplaceholderEprocessheatINCPRH TheCCScontrolsarenamedSINDPN*CCSwherethe*referstothefuelused.The costandenergypenaltyforthesetechnologiesisbasedonthevaluesusedfortheelectric sectorintheepadatabase.thesetechnologiesbecomeavailablein2020.theemissions accountingisalsomovedtonewtechnologies(sindpn*)thatare upstream ofthe

147 133 processheattechnologies.carboncaptureandsequestration(ccs)optionsareadded betweentheemissionsaccountingandprocessheattechnologies.aftertheprocessheat technology,thepm,so2,andnoxcontroloptionsareappliedasspecifiedabove $Transportation$ Inadditiontoaddingsectorspecificemissions,therepresentationofCAFEwasalso changed.theexistingcafecalculationswerechangedtorefertothelhvinsteadofhhv. For2005theHHVisusedbecausealteringthisyearcausesdifficultiesbecauseof constraintstohistoricaldata $Other$Changes$ Intwoscenarios(INDandTRN_OH)thedefinitionofCO2inthecommoditiestab waschangedtomtbecauseitwaserroneouslykt.thisisjustasmallchangefor consistency $Changes$by$workbook$ Industrial Solarthermalprocessheat Efficiencyoptions ControlsonPHandboilerswithconstraints Emissionstypesandupstream Electricity Upstream Emissionstypes PVcost

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154 140 Chapter4 EvaluatingtheHealthBenefitsofInternalizingAirQualityandClimateExternalities throughfeesintheusenergysystemusing3dairqualitymodeling KristenE.Brown 1,DavenK.Henze 1,MatthewD.Turner 1,JanaB.Milford 1 1 MechanicalEngineeringDepartment,UniversityofColorado,Boulder,CO AbstractandPreamble 4.0.1$Abstract$ Emissionsfromenergyproduction,conversion,anduseareassociatedwithnegative impactsonhumanhealthandclimate.weuseanenergysystemmodeltodeterminethe impactoffeesdesignedtomitigatethesenegativeimpacts.wethenuseairqualityand healthbenefitmodelstoquantifytheeffectofthreeemissionspoliciesfortheyear2045. Thepoliciesarecomposedofemissionsfeesdesignedtointernalizesomeofthe externalitiesassociatedwithhealthimpactingpollutantandgreenhousevgasemissions. Thenetpolicybenefitsin2045are$413billionwithfeesbasedonhealthrelateddamages, and$238billionwithclimatevbasedfees.acombinedpolicy,whichincludesfeeson emissionsofbothgreenhousegasesandhealthimpactingpollutants,hasnetbenefitsof $439billion.ConcentrationsofbothPM2.5andozonearereducedwithallthreepolicies, thereforeairqualitycovbenefitsexistwithclimatepolicytargets,buttheairquality improvementsandhealthbenefitsarelargerwhenthefeesincludingthosetargetinghealth impactingpollutants.

155 $Preamble$ Theresultspresentedinthischapterarepreliminary.Weintendtomodifytheair qualitysimulationstoremovesomeoftheuncertaintyassociatedwiththemethodology thatweusetoscaletheemissionstorepresenttheresultsofthemarkalruns.thenew simulationswillbetteraccountforthenonvenergyrelatedfractionofemissionsthatare capturedintheemissionsreductionsdescribedbelow.wealsointendtoreconsiderthe wayupstreampm2.5emissionsarehandled,duetothelargeportionofbenefitsassociated withtheseemissionsandtheuncertaintysurroundinghowtheirlocationistreated.we alsohopetoimproveourabilitytoevaluatetheaccuracyofour2007modeledpm2.5 concentrations,asourestimatesdonotcorrespondwellwiththeobservedairquality. Viewingtheresultspresentedhereisinstructive,andweexpectsomeconclusionstohold relatedtoregionaldifferencesandrelativedifferencesbetweencases,butwewillcontinue toseekwaystoimprovethisanalysis,particularlypertainingtoscalingfactorsfor emissionsreductionsandpm2.5modelevaluation.duetotheseuncertainties,the quantitativeresultspresentedherearetentative,particularlycalculationsoftotalbenefits andabsolutefutureairquality.therearestillqualitativeconclusionsthatcanbedrawn fromtheresults,suchaswhichareasofthecountryorfeesarelikelytohavethemost improvement. 4.1Introduction Energyproduction,conversion,anduseproduceemissionsthathavenegative consequencesforhumanhealthandtheearth sclimate.ozone(o3),whichisformedfrom emissionsofnoxandvocs(volatileorganiccompounds),andpm2.5(particulatematterless

156 142 than2.5micronsindiameter),whichisemittedfromcombustionsourcesaswellasformed fromemissionsofnox,so2andvocs,havemanyimpactsonhumanhealth,particularlyon cardiovascularandrespiratorysystems,whichcanleadtosocietalandmedicalcosts.high concentrationsofpm2.5areassociatedwithhealthimpactsincludingasthmaexacerbation (Ostroetal.,2001;Maretal.,2004),heartattacks(Popeetal.,2006),andotherillnessesof thecardiovrespiratorysystem(kloogetal.,2012;pengetal.,2009;bell,etal.,2008; Dockeryetal.,1996;Moolgavkar,2000;OstroandRothschild,1989).Exposuretohigh concentrationsofo3isassociatedwithhealthimpactsincludingchronicasthma(mortimer etal.,2002;schildcroutetal.,2006;o Connoretal.,2008),respiratoryrelatedhospital visits(marandkoenig,2009;gladetal.,2012).ghgemissionsleadtoclimatechange includingincreasesintemperatureandchangesinprecipitationpatterns(kirtmanetal., 2013).Amongotherimpacts,climatechangecanreducecropyieldsaffectingfoodsupply andaltertheavailabilityofwater(dasguptaetal.,2014).thesenegativehealthandclimate effectsareexternalitiesbecausetheyarenotincludedinthepriceofenergy. Airqualitymodelingandhealthimpactassessmenttoolsarefrequentlyemployedto evaluatethemonetizedbenefitsofairpollutionregulations.fannandrisley(2011)used observedconcentrationswiththebenmap(benefitmappingandanalysis)toolto determinethehealthbenefitsofhistoricalairqualitytrendsundertheinfluenceofthe NAAQS.TheyfoundanoverallreductioninmortalityfrombothO3andPM2.5inthetime periodfrom2000to2007.fannetal.(2012)estimatedthatover100,000premature mortalitieswereassociatedwithmodeled2005levelsofairpollutionintheus.asanother example,aregulatoryimpactanalysis(ria)(u.s.epa,2012b)wasperformedbytheepa whenthenationalambientairqualitystandard(naaqs)forpm2.5wasstrengthenedfrom

157 143 15to12µg/m 3.TheRIAusedtheCommunityMultiscaleAirQuality(CMAQ)model,a continentalvscaleatmosphericchemistryandtransportmodelandthebenefitsmapping andanalysisprogram(benmap),softwaredesignedtocalculateairpollutionrelated healthimpacts,toestimatetheeffectsoftheregulation.epaestimatednetbenefits,which includethecostofadditionalemissionscontrolsandmonetizedhealthbenefits,in2020 from$3.7billionto$9billionassuminga3%discountrate.fortheriaaccompanyingthe revisionoftheozonestandardfrom75ppbto70ppb(usepa,2015a),theepafoundthat areductioninnoxemissionsof237v556thousandtonsperyearforthecontiguousus excludingcaliforniaandavocreductionof20v105thousandtonsperyearoverthesame domainin2025wouldleadtonetannualbenefitsof$2.4v12billion(year2011usd).the totalbenefitsincludepm2.5covbenefitsofreducedmorbidityandmortality,whichwere calculatedbyusingexistingbenefitpertonvaluesforprecursoremissions. Analysisofthemonetizedhealthbenefitsofairqualityregulations,inconjunction withestimatesofemissionschangesthatdrovetheseimprovements,hasledtocalculations ofthemarginaldamagesofhealthimpactingpollutants,andhowthesevarybylocationand sector.marginaldamagesrefertotheexternalcostassociatedwithanadditionalunitof emissions,suchasthevalueofmortalityandotherhealthimpactsassociatedwithan additionaltonofemissionsofso2.marginaldamagesforcriteriapollutantsarecalculated inseveralpapersforemissionsfromdifferentsourcesincludingelectricitygeneration, residentialandcommercialenergyuse(nationalresearchcouncilcommitteeonhealth, Environmental,andOtherExternalCostsandBenefitsofEnergyProductionand Consumption,2010),andseveralenergyandindustrialsources(Fannetal.,2012). Marginaldamagesforhealthimpactingpollutants(HIPs)areheavilyaffectedbythe

158 144 proximityoftheemissionssourcetopopulations,sodamagestendtobelargerfor industrialandtransportationsourcesthatandlowerforelectricitygeneration.thelargest componentofthedamagevaluesispm2.5relatedmortality.thosedamagesareestimated usingconcentrationvresponsefunctionsdeterminedbykrewskietal.(2009),ladenetal. (2006),Popeetal.(2002)andWoodruffetal.(2006).Turneretal.(2015)foundthat marginaldamagesofblackcarbonemissionsowingtoprematuredeathsintheusare largernearthelocationofprematuredeaths.buonocoreetal.(2014)discusstheinfluence oflocationandfindthepopulationdistributiondownwindofemissionsourcestobe importantincalculatingmarginaldamages. Futuremarginaldamagesofairpollutantemissionswilldependonfuture meteorologyandboundaryconditions.otherstudieshaveconsideredtheeffectofaltered meteorologyandboundaryconditionsonmodeledairquality.simulatingairqualityusing futuremeteorologyassumingclimatechangeresultsinhighero3andpm2.5concentrations, althoughwhenemissionsarealsoreducedthiseffectismitigated(trailetal.,2014;garciav Menendezetal.,2015;Fioreetal.,2012).Thereisuncertaintyinprojectingthisfuture meteorology,soitisimportanttobeawareofpossibleeffects,butaggressiveclimatepolicy couldalsomitigatetheseeffects(hogrefeetal.,2004). Somepreviousresearchhascoupledenergysystemsmodelingwithairquality modeling.saarietal.(2015)usedacoupledeconomicandairqualitymodelingsystem comprisedoftheunitedstatesregionalenergypolicy(usrep)modelandthe ComprehensiveAirQualityModelwithExtensions(CAMx)toexploretheairqualitycoV benefitsfromtwoclimatepolicies.withacapvandvtradeclimateprogram,theairquality

159 145 covbenefitscompletelyoffsetthecostofthereduction,althoughthesecovbenefitsarenot distributeduniformlyacrosstheus.thompsonetal.(2014)usedusreptodeterminethe costsandapproximateemissionschangesassociatedwiththreedifferentclimatepolicies:a cleanenergystandard,acapandtraderegulation,andatransportationfuelstandard.they thenusedcmaqwithscaledemissionstodetermineambientconcentrationsofo3and PM2.5andcalculatedmonetizedhealthcoVbenefitswithBenMAP.Theyfoundthatmore flexiblepoliciesarelesscostly,andthattheairqualitycovbenefitsalonemaybelargerthan thecostsofthepolicy,whichwillhavefurtherclimatebenefits.theyreportthattheair qualitycovbenefitscanoffsetupto1000%ofthecostoftheclimatepolicies,butforsome policiesthecostofthepolicywilloutweightheairqualitycovbenefits.rudokasetal. (2015)analyzedseveralclimatepoliciesusingMARKAL(theMARKetALlocationenergy economicmodel),andfoundthatso2andnoxemissionsarelowerwithmanyclimate policies,althoughsometimestheyareslightlyhigherduetoreductionininvestmentin controlsassociatedwithshorterlifetimesofpowerplants.trailetal.(2015)continuedthis work,couplingthemarkalresultswithcmaq.theypresentthato3andpm2.5decrease withmostco2policiesconsidered,buttheincreasednoxemissionsinsomecasesleadto increasedo3,andinsomeurbanareasthereisanincreaseinpm2.5associatedwithfuel switching. Previousstudieshavealsoconsideredtheeffectofinternalizingemissions externalitiesonthetotalcostofthesystem.nguyen(2008)show,usingmarkalfor Vietnamfor2005V2025,thatinternalizinghealthandclimateexternalitiesinVietnam wouldleadtoanincreaseinelectricitypriceof2.6cents/kwh,buttheavoidedexternal costswouldbe4.4cents/kwh,sothetotalcostofelectricitydecreased.pietrapertosaetal.

160 146 (2010)foundthatbyinternalizinghealthandclimateexternalitiesinItaly,modeledusing themultivregionneedsvtimesmodelthrough2050,thetotalsystemcostincludingthe energysystemcostandexternalitiescostwasreducedbyupto1.7%comparedtothe projectedcostswithoutinternalizingexternalities. Inthispaper,weperformanintegratedassessmentoftheairqualityandhealth benefitsofapplyingdamagevbasedfeestoemissionsfromenergyproduction,conversion, anduse.wecombineenergysystem,airquality,andbenefitsmodelingtodeterminethe extenttowhichinternalizingexternalitiesthroughfeesreducesexternalitiesatacostlower thanthedamages.themarkalmodeldescribedinsection4.1isusedtoprojecthow futurefuels,energytechnologies,andemissionscontrolsmightchangeinresponseto applicationofemissionsfees,describedinsection4.2,thataredesignedtointernalize externalitiesbyincorporatingdamagecostsintothecostofenergy.onesetoffeesapplied correspondstohealthdamagesfromairpollution,asecondsetisfocusedonclimate changeimpacts,andathirdhasfeesaccountingforboth.thecmaqmodel,describedin section4.3,isusedtoevaluatetheairqualityin2045forabasecaseaswellasthethreefee cases.wedetailhowtheemissionsforeachcasearecalculatedinsection4.4,andbenmapv CEisdescribedinsection4.5.Wepresenttheairqualityresultsinsection4.3. Theoretically,multiplyingtheavoidedemissionsbythedamagevalueofthe emissionsshouldapproximatethebenefitofapolicythatreducesemissions.inthispaper, weuseadditionalmodels(cmaqandbenmap)tocalculatethebenefitsofemissions reductionscorrespondingtoeachfeecase,andcomparethemtodamagescaledemission (estimatedbymultiplyingthereductions(tons)bythedamagevalue($/ton)).weexpect

161 147 theadditionalmodelstoprovideamoreaccuratebenefitestimatethanthedamagescaled emissions,becausethemarginaldamagesrepresentanaveragevalue,whilethebenefitof reducingemissionsisnotconstantacrossemissionslocations(fannetal.,2012).we presentbenefitscalculatedbothwaysinsection4.3.thismethodologyallowsusto comparethereducedformapproachtoevaluatingbenefitsofapolicytothemoretimev andresourcevintensivebenefitcalculation.wediscussthedifferencesandother conclusionsinsection Methods 4.2.1$MARKAL$$ MARKALisanenergysystemmodelthatcanbeusedtodeterminethelowestcost systemoffuelsandprocessing,conversionandendvusetechnologiesthatwillsatisfya specifiedlevelofdemandforenergyservices.weuseamodifiedversionoftheepaus9 regiondatabase(usepa,2013b),whichisbenchmarkedtothe2014annualenergy Outlook(U.S.EnergyInformationAdministration,2014).Themodificationsmadeforthis studyincludeanincreaseinemissionscontrolandsolartechnologiesaswellasefficiency improvementsintheindustrialsector,morethoroughaccountingoflifecycleemissions, andcostupdatesforrenewabletechnologies(brownetal.,2013;brownetal.,2014). MARKALsolutionsmustsatisfydemandforenergyservicesandotherconstraintssuchas emissionslimits,butcandosothroughtheuseofawiderangeoffuels,production, emissionscontrolorenergyconservationtechnologies(loulouetal.,2004).

162 148 OurMARKALsimulationsincludeanofeecaseandthreefeescenariosfortheUS from2005to2055infivevyeartimesteps.weusea5%discountrate.thedifferencein totalsystemcostinayearwithafeeenforcedcomparedtocostinthenofeecase simulationwithoutfeesisinterpretedasthecostofthepolicy.thetotalsystemcosteach yearincludestheannualizedinvestmentinnewtechnologies,operationandmaintenance costs,thecostofimportingandproducingfuels,revenuefromenergyresourceexports, andcoststotransportthefuel $Emission$Fee$Cases$$ Inthisstudy,wegeneratefouremissionsscenariosfortheyear2045byconsidering applicationoffeestoemissionsproducedintheusenergysystemandsimulatingtheir impactonemissionsusingmarkal.unlessotherwisestated,allcurrencyvaluesinthis paperarepresentedinyear2005usd. Thefirstcaseweconsiderrepresentsabusinessasusualscenario,including existingpoliciestoreduceemissionsandinfluenceenergychoicessuchastherenewable portfoliostandards,thecorporateaveragefueleconomystandards,andthecleanair InterstateRule,whichhassincebeenreplacedbytheCrossStateAirPollutionRule,but withnoimplementationofemissionsfees.thisisreferredtoasthenofeescase. Theothercasesallincludeemissionsfeesinadditiontotheexistingpolicies representedinthenofeecase.thefeesusedarebasedonestimatesofdamages associatedwiththeemissions.inthehip,orhealthimpactingpollutant,case,feesare leviedonhealthimpactingpollutants(nox,so2,pm10,pm2.5,andvocs)fromenergyrelated emissionssources.thefeesforthiscasearepresentedintable4.1.thefeesvarybyenergy

163 149 sectortocapturesomeofthelocationdependenceofthedamages,exceptforpm10and VOC,forwhichsectorspecificvalueswerenotavailable.Forinstance,industrialemissions tendtobelocatednearpopulationcentersandwillleadtomorehealthimpactsthan electricsectoremissionsthatareoftenlocatedfurtherfromdensepopulations.thefees usedherearebasedondamageestimatesfromfannetal.(2012)withthefollowing exceptions:vocfeesarebasedonfannetal.(2009),andthepm10andcommercialsector valuesarebasedonnationalresearchcouncil(2010)estimates,scaledtomatchthe generallyhigherestimatesinfannetal.(2012).feesforthecommercialsectorareapplied tonaturalgasuse(notemissions)becauseemissionsspecificdamageestimateswerenot availableforthissector;mostcommercialenergyisfromnaturalgasusedforheatorfrom electricity.thesecondfeecaseisdesignedtoaddressclimateexternalities,byimposing feesongreenhousegas(ghg)emissions(methaneandco2)fromenergy.thefeesinthis casevaryacrossyearsbecausetheimpactincreasesastotalcarbonloadincreaseswith time;in2045theco2feeis$86.57/tonco2andthemethanefeeis$2,420/tonmethane. TheGHGfeesarebasedonSocialCostofCarbon(InteragencyWorkingGrouponSocial CostofCarbon,2013)fortheaverageresultofa2.5%discountrate.Methanefeesare determinedfromthesocialcostofcarbonusinga100yearglobalwarmingpotential (GWP)of28(Myhreetal.,2013).Lastly,wealsoconsideracombinedfeecaseinwhich boththehipandghgfeesareappliedsimultaneously.

164 150 Table4.1:FeesappliedinHIPpolicycase.(Allvaluesin$/tonexceptnaturalgasusewhich isinmillion$perpetajoule.)thenaturalgasusefeeonlyappliesforthecommercial sector,becauseemissionsspecificdamageswerenotavailableforthissector. Sector NOx PM10 PM2.5 SO2 VOC Natural GasUse M$/PJ Electric Industrial Transportation Upstream Refinery Residential Commercial $CMAQ$Simulations$and$Performance$Evaluation$Data$ TheCommunityMultiscaleAirQuality(CMAQ)modelisathreeVdimensional Eulerianairqualitymodel(ByunandSchere,2006).CMAQincludestreatmentofgaseous, aqueous,andsolidphasechemistryandaerosoldynamicsinordertosimulatethe interactionofpollutantswitheachotherandtheenvironment.thephysicalprocesses modeledbycmaqincludeadvectionanddiffusionbothhorizontallyandverticallyaswell aswetanddrydeposition.thisincludestheformationofsecondaryaerosolssuchas sulfateandnitrate.forthisprojectweusecmaqv5.0.2withthe36vkilometerresolution CONUSdomain,whichextendsoverthecontiguous48statesoftheUSandbeyondwith24 verticallayers.meteorologyinputdataareobtainedusingversion3.1oftheweather ResearchForecastingmodel(WRF)(Skamarocketal.,2005);andboundaryandinitial conditionsarecalculatedusinggeosvchemversion witha2.0 o x2.5 o grid resolution(u.s.epa,2012b).biogenicemissionsarefrombeis2.14(pierceandwaldruff,

165 );wildfireemissionsareobtainedusingtheSMARTFIRE2system(Eweretal.,1999); andsectoralemissionsusethesparsematrixoperatorkernelemissionsmodelingsystem (CoatsandHouyoux,1996)v3.5.1includingEGUandnonVEGUindustrialcombustion sources.thedefaulthistoricalemissionsinputsweuseincmaqarebasedon2007 NationalEmissionsInventory(NEI)emissions.Weusedthecarbonbondgasphase chemicalmechanismwithactivechlorinechemistry(cb05cl)andthefifthvgeneration aerosolmechanism(ae5).simulationsareperformedforfourmonthsoftheyear (February,May,August,andNovember)tocaptureseasonaldifferencesacrosstheyear withminimizedcomputationtime.aspinuptimeofoneweekisrunbeforeeachofthese monthsbutisnotpartoftheanalyzedmodelresults. WefirstranCMAQfor2007withoutanyinclusionofscalingfactorsfromMARKAL. Wecomparetheresultsfromthis2007caseagainstobservationsfor2007obtainedfrom theaqsdatamart(usepa,2016).theaqsdatamartcontainsallmeasuredvaluesthe EPAcollectsviathenationalambientairmonitoringprogram,including8houranddaily averages.whenwereferto annual comparisonswemeancomparingobservationsfrom February,May,August,andNovembertothe2007modelresultsfromthesamemonths. WecomparetotalPM2.5andO3aswellasthesulfateandnitratecomponentsofPM2.5,as thoseareimportantforhealthimpacts.wecreatedplotsofthe2007modelresultswiththe observedconcentrationsplottedasthemonitorlocation,aspresentedinfigure4.2and Appendixfigures4.7V4.16.Wealsocalculatedthestatisticalrelationshipbetween observedconcentrationsandmodelconcentrationsatthesamelocation.

166 $Emission$Scenarios$ InordertouseCMAQtoestimatetheairqualityimpactsofthepoliciesmodeledin MARKAL,weneedtomaptheoutputoftheemissionsfromMARKALtoinputsforCMAQ. Thesame2007emissionshavebeenusedatthe12kmresolutioninpreviousstudies (Turneretal.,2015;Turneretal.,2015).Herewemodifytheseemissionsusingscaling factorsfortheyear2045foreachpolicyscenariotreatedbymarkal.scalingfactorsare calculatedfornineregionsofthecountry,correspondingtothenineregionsinmarkal, mappedinfigure4.1.thismethodologyassumesthatthespatialdistributionofemissions atscalesfinerthantheseregionsremainsfixed.althoughthisassumptionisunlikelytobe preciselytrueasolderfacilitiesareretiredandneweronesbuilt,manyemissionswillbein similarlocationsasdemandswillstillbenearthesamecities,resources,orother industries.scalingfactorsareappliedonlytoemissionswithintheus,nottotheboundary conditionsortheemissionsinthepartsofcanadaandmexicoincludedinourmodeling domain.alimitationoftheanalysisisthatnonvenergyrelatedemissionswithintheusare affectedbytheemissionsfactorsforthescaledspecies.nonvanthropogenicemissionsare notaffectedbytheindustrialandelectricsectorscalingfactors.thespeciesscalingfactors areappliedtoallemissionsofaspecies.vocscalingfactorsarenotappliedtovocsthat aremainlybiogenicincludingisoprene,terpenes,,andsesquiterpenes.forpm2.5,wedonot applythescalingfactortoseasaltorwaterintheparticlephase.forpm10,thesoil emissionsarenotperturbed,norarethesalt,water,orsulfateemissions;onlythe unspeciatedpm10emissionsarealteredbecausetheotheremission,coarsesoil,isnot energyrelated.

167 153 Figure4.1ThenineMARKALregions,forwhichemissionschangesarecalculatedforCMAQ inputs.thisfigureismodifiedfromthemarkalus9regiondatabasedocumentation(us EPA,2013b). Table4.2Scalingfactorsforpollutantsandsectorsforeachcaseandregion.

168 154 Twocategoriesofscalingfactorsarecalculated,oneforeachofNOx,CO,SO2,VOCs, PM2.5,andPM10byregion,andthentwoadditionalscalingfactorspercaseforindustrial andelectricitygenerationrelatedemissions,becausethesesectorschangemore significantlyinthemarkalresults.weusetwocategoriesofscalingfactorsbecauseour emissionsareseparatedbyspeciesandbysourcecategory.wecanmultiplyascaling factorbyeithersubsetofemissions,speciesorsector,butwhenspeciesvspecificscaling factorsareappliedtheyapplytoallemissionsofthatspeciesregardlessofsector.when sectorspecificscalingfactorsareapplied,emissionsarealteredbythescalingfactor regardlessofspecies. Tocalculatethepollutantandsectorscalingfactors(Ap,R),the2045MARKAL emissionsarecomparedtothe2010nofeeemissionsfrommarkal.thevaluesare presentedintable4.2andcalculatedusingequation1. (1) wheremp,risthemarkalemissionsforpollutantp'(p'='nox,voc,so2,pm10,pm2.5,co)in regionr'(r=1v9),andap,risthescalingfactorusedtoalterthecmaqemissions.the subscriptnreferstoemissionsfrom2010inthenofeecase.allotherresultsarefrom 2045forthecasebeinganalyzed.2010ischosenasabaseyearbecauseMARKALonly calculatesresultsin5yeartimestepssothereisnotanexactmatchto2007.mo,pis emissionsthatmarkaldoesnotspecifyasbeinginaparticularregion,typicallyemissions associatedwithupstreamprocesses;theseemissionsareevenlydistributedacrossthe regionsforthepurposeofthisanalysis.theap,rvaluesalignwitheachpollutantandregion

169 155 intable4.2.scalingfactorsfortheindustrialandelectricsectorsarecalculatedasfollows. FirstwedefineBp,s, (2) wherekp,sistheemissionsofapollutantwithineithertheindustrialorelectricity generatingsector.bp,siscalculatedasaninterimvalueforeachpollutant,'p,andrelevant sector(s=industrialandelectric).asinequation1,nreferstothe2010nofeecase.we nextcalculateaninflationfactorcs, (3) where<ap,r>ristheaverageofthequantityovertheregions,weightedbythequantityof emissionsinthatregion,calculatedseparatelyforeachpollutant.csiscalculatedseparately fortheelectricandindustrialsectors,andthefractionwithintheouterbracketsis calculatedforeachofasubsetofthepollutants(nox,so2,pm10,pm2.5).thenthesefour valuesforeachsectorareaveragedasindicatedbytheouterbrackets.thecsvaluesare denotedas IND and ELC intable4.2. Therearetwoformulaethatcanbeusedtodeterminetheultimateemissionsfactor thatisusedincmaqgiventhe2007emissions,aswritteninequations4and5. (4) (5)

170 156 wherees,p,risthemodifiedemissionvalueusedincmaq,fs,p,risthehistorical2007cmaq emissions,op,risthe2007emissionsofanyanthropogenicpointsourceemissionnot comingfromelectricitygenerationorindustry,andep,risthemodifiedemissionvaluesfor emissionsthatarenotelectricitygeneratingorindustrialsources.foremissionsthatare fromanelectricorindustrialsectorsource,equation4isused,whileequation5isusedfor othermodifiedemissions.industrialemissionsdorefertobothrefineryandindustrial emissions. AtablewithallofthescalingfactorscanbefoundinTable4.2.Inmostcases,the scalingfactorrepresentsadecreaseinemissionsfromthehistoricallevel,evenfortheno Feecase.TheexceptionstothisarethatSO2emissionsinregion9(correspondingtothe westcoaststates)increasefromtheirverylowinitiallevelwithoutfees,andthatindustrial sectoremissionsincreaseovertimeduetoeconomicgrowthandarethereforealways higherthanthe2007emission(alwaysmultipliedbyafactorgreaterthan1).this industrialfactorisalsolargebecauseemissionsaredecreasedbythespeciesfactorbefore beingincreasedbytheindustrialfactor $BenMAPFCE$$ BenMAPVCEversion1.1,theEnvironmentalBenefitsMappingandAnalysis ProgramVCommunityEdition,wascreatedbytheUSEPAtoestimatehealthimpactsand economicbenefitsrelatedtochangesinairquality(usepa,2013c).benmapvceincludesa varietyofhealthimpactfunctions,populationdata,andbaselinehealthdata.these functionsrelatechangesinairpollutantconcentrationswithchangesinhealth.this calculationconsiderstheexposedpopulation,thebaselineincidencerateoftheeffect,the

171 157 concentrationofthepollutantsconsidered,andtheconcentrationvresponsefunction chosentorelatethepollutantstothehealtheffects.benmapvceconsidershealtheffects associatedwithozoneandpm2.5.benmapvcedoesnotconsiderhealthimpactsforno2. ThereareuncertaintiesintheresultsfromBenMAPVCE,whichstemfromuncertainties withinthehealthimpactfunctions,modeledpollutantconcentrationsfromcmaq,and projectionsofpopulation. ThepollutantconcentrationsfromCMAQareusedasaninputtotheBenMAPVCE model.thesemodelsareoftenusedtogether(hubbelletal.,2009;fannetal.,2011;nowak etal.,2013).benmapvceisusedtocalculatebenefitsforeachofthethreefeecases comparedtothenofeecasein2045.weuseacurrencyyearof2005tocorrespondwith themarkalcostestimates.thehealthimpactfunctionsandvaluationfunctionsare selectedbasedonthefunctionsusedfortheo3andpm2.5naaqsregulatoryimpact analysis(usepa,2015a;u.s.epa,2012b).themortalityestimatesintable4.4are calculatedbasedonkrewskietal.(2009)andjerrettetal.(2009).acompletelistofhealth impactfunctionsusedcanbefoundintheappendix.weapplyepa sstandardvalueof statisticallife,basedon26valuevofvlifestudies,whichhasanaveragevalueof$6.6million year2005usd.the2040populationdataat12kmresolution(thelatestavailablein BenMAPVCE)areusedtoevaluatetheimpacts.Thismayleadtoaslightunderestimateof healthimpacts,butsomeofthehealthimpactfunctionsdependondemographic breakdowns,andtryingtoprojectthisinformationtothefutureisbeyondthescopeofthis work.thetotalpopulationisprojectedtoincreaseonly2%from2040to2045according touscensusprojections(colbyandortman,2014),aspopulationgrowthisprojectedto slowoverthenextfewdecades.baselinemortalityincidenceisbasedonthe2020

172 158 projections,whichisthelatestavailableinbenmapvce.baselineincidencedataforother healthimpactsisfrom2007,exceptschoollossdaysandacutebronchitis,whicharefrom 2000andtheasthmaprevalencedatasetfrom2008.EPAstandardincomegrowthwas projectedto2020,againthelatestyearavailable.regionalhealthimpactsarecalculatedat thecmaq36kmgridlevel,thenaggregatedtostatelevel,andthensummedbytheregions infigure4.1. Inadditiontothemultiplecategoriesofbenefits,therearemultiplewaysto determinethevalueofthosebenefits.inadditiontocalculatingbenefitsusingbenmapvce, wealsocalculatedamagevscaledemissions,whichshouldapproximatebenefits.whenwe refertodamagevscaledemissionsinthispaper,wearereferringtothequantityobtainedby multiplyingemissionsreductionsfromthenofeecasebythehipdamagevaluesintable 4.1,addingreductionsincommercialnaturalgasmultipliedbythefeesincedamagesfor thecommercialsectorareintermsofnaturalgasuseinsteadofemissions. N = X p,s H p,s D p,s + GD G (6) wherenisthedamagevscaledemissionvalue,δhpsisthechangeinemissionsofpollutantp insectors'comparedtothenofeecase,dpsisthedamagevalueforthatpollutantand sector,δgisthechangeincommercialnaturalgasusefromthenofeecaseanddgisthe damagevalueforcommercialnaturalgas.theavoidedghgdamagesarecalculatedusing thesamemethodbutmultiplyingbytheghgfees.netbenefitscanbecalculatedintwo ways,dependingonhowtotalcostsaredeterminedwithrespecttotreatmentoffees.fees canbeconsideredpartofthecostorcanbeassumedtobeneutralwithintheenergyv

173 159 environmentvhealthsysteminwhichweareinternalizingexternalities.thebenefits includetheavoidedghgdamagesandallavoidedmortalityandnonvmortalitybenefits. 4.3Results 4.3.1$Air$Quality$ BaselineCMAQmodelsimulationsofO3andPM2.5for2007arefirstevaluatedusing insitumeasurements.figure4.2(a)isaplotofthemodeledestimateoftheannualaverage PM2.5concentrationfor2007(basedonthefourmodeledmonths),whiletheoverlaiddots showtheobservedconcentrationsfromaqsdata(averagedoverthesamefourmonths) forcomparison.thecorrelationcoefficientbetweenthemodeledandobservedannual averageconcentrationofpm2.5is0.55,andtherootvmeanvsquareerror(rmse)is4.93 µg/m 3.Figure4.2(b)presentsthedailymaximumoneVhouraverageO3concentrations acrosstheus,averagedoverthemonthofaugust,overlaidwithaqsobservations.we presentaugustresultsforo3becausethisisthemostrelevantmonthforhealthimpacts andpolicycompliance,sinceo3isgenerallyhighestinsummer.figure4.15intheappendix presentsascatterplotofdaily1hrmaximumconcentrationsformodelvobservationpairs, includingtheoccurrenceofhighervaluesexpectedinsummer.thecorrelationcoefficient foraugustozoneis0.66,andthermseis18ppb.additionalevaluationplotsanda statisticalsummaryofmodelperformanceareincludedintheappendix.

174 160 (a) (b) Figure4.2(a)ModeledandobservedPM2.5concentrationsin2007.Theaverageofthe24hr averageoverfebruary,may,august,andnovemberisplotted.(b)modeledandobserved ozoneconcentrationsin2007.theplotvaluesaretheaverageofdaily1hourmax(mda1) forthemonthofaugust. ModeledPM2.5concentrationsarehighestinNovemberandFebruaryandlowestin May.Geographically,pollutantconcentrationsarehigherintheeasternhalfoftheUS,the centralvalleyofcalifornia,andidaho.locally,therearesomefiresthatleadtohighpm2.5 concentrationsduringthetimeperiodtheyareactive,sometimesinexcessof40µg/m 3. Forthefireevents,thePM2.5iscomposedofapproximately45%primaryorganiccarbon,

175 161 10%elementalcarbon,andupto40%unspeciatedPM2.5mass.Elementalcarbon concentrationsarealsohighinurbancenterswheretheymakeup10v20%ofthetotal PM2.5mass.PM2.5isotherwisemostlycomposedofsulfate(20V40%),nitrate(frequently around30%),andammonium(10v20%)aerosols.secondaryorganicaerosol(soa)is importantinsomeareas,primarilythesoutherncoastalstates,whereitmaymakeupas muchasaquarterofthepm2.5mass. Theemissionschangesfrompresentdayarerepresentedinthescalingfactors (Table4.2).Thescalingfactorsareappliedtoallemissions,includingnonVenergyrelated emissions,exceptfortheexcludedspeciesmentionedabove.theemissionschangesfor eachfeecasecomparedtothenofeecasearepresented,byregion,intable4.3.the emissionsreductionspresentedintable4.3areapproximate,becausetheyonlyaccount forthespeciesspecificreductionsanddonotincludetheadditionalreductionsfromthe electricandindustrialsector.inallfuturecases,concentrationsofbothozoneandpm2.5are reducedcomparedtotheoriginal2007concentrations,aswewouldexpectwiththe reducedemissions.thereareafewsmallareaswhereo3increasesslightly,buttheaverage MDA1forAugustisnevermorethan3ppbgreaterinthe2045NoFeecasecomparedto the2007concentrations. PM2.5concentrationsareloweracrossallregionswithfeescomparedtotheNoFee case.thereductionsinconcentrationaresmallestwithghgfees.thegeographical distributionofconcentrationreductionsissimilaracrosscases.thelargestabsolute reductionsinconcentrationoccurwithcombinedfees,butthecombinedfeecaseisvery similartothehipfeecase.thelargestreductionsinconcentrationsofbothpollutants

176 162 occurinregion3(themidwest,seefigure4.1)becausewithoutfeesthisregionhasmany highlypollutingenergysources,includingcoalvfiredpowerplants.fortheseemissionv intensivesources,shiftingtoloweremittingtechnologiesislessexpensivethanusingthe existingfacilitiesandpayingemissionsfees.theconcentrationreductions,asapercentage ofthenofeeconcentration,tendtobelargestinregionswheretheemissionsreductions werelargest.figure4.4presentsboththepercentreductioninemissionscomparedtothe NoFeecaseaswellasthepercentdifferenceinannualaveragePM2.5concentrationsfrom thenofeecasebyregion.thisisalsopresentedintableforminappendixtable4.8. Region8(theIntermountainWest)hasthelargestpercentagedecreasesinPM2.5 concentrationsaswellasthelargestdecreaseinso2emissionsandlargedecreasesinnox emissions.althoughthelargepmconcentrationsinoregonareduetofires,thereare reductionsinthefeecasesinfigure4.3.thisisduetothemethodofscalingemissions, whichleadstoreductionsinnonvanthropogenicemissions.inaugust,alargefireinidaho alsoaffectsairquality(seeappendixfigure4.10c).

177 163 Figure4.3AnnualaveragemodeledPM2.5concentrations PM 2.5 Concentration PM 2.5 Concentration PM 2.5 Concentration NO x Emissions SO 2 Emissions PM 2.5 Emissions Figure4.4Therelationshipbetweenpercentageofemissionsreductionsandpercentage reductionsinpm2.5concentrationsbyregion.thenumberslabeltheregionassociatedwith eachpoint.theemissionsreductionsarebasedontotalmarkalemissionsreductionsfor eachspeciesbyregionandmaynotaccuratelyrepresenttheemissionsreductionsincmaq dototheinclusionofnonvenergysectoremissionsincmaq.

178 164 Figure4.5displaysthehighesthourlyaverageO3concentrationperday(MDA1) averagedoverthemonthofaugustforthenofeecaseandthedifferencescausedbyfees. Itisobviousfromthisthattheozoneconcentrationsarereducedwithallfees,andreduced furtherwithhipfees.whileo3concentrationsdecreaseovermostoftheus,thereare someareaswithaslightdisbenefit.attheregionallevel,thesmallestdecreaseino3 concentrationisinregion8withthelargenoxreductionsmentionedabove.conversely, regions3and6havethelargestreductionsinnoxandalsothelargestreductionsino3 concentrations.thisisanexampleofwhycmaqprovidesmoreinformationontheeffectof policiesthanemissionsprojectionsalone.duetononvlinearitiesino3,decreasesin emissionscansometimesleadtoincreasesinconcentrations.regardless,o3 concentrationsinthemajorityofthecountryarestillreducedbyreducingemissions throughdamagebasedfees.thereductionsino3maybeoverstatedintheresultshere, becausethescalingfactorsthatreducenoxandvocemissionsapplytosomeemissions thatarenotassociatedwithenergyandwouldthereforenotbereducedbyenergyrelated fees,specificallyinidaho.

179 165 Figure4.5AverageofthehighesthourlyaverageO3concentrationeachday,orMDA1,in AugustinppbfortheNoFeecaseandthedifferenceinppbofeachfeecasecomparedto thenofeecase. Wealsopresentresultsforozoneintermsoffrequencywithwhichmaximumdaily eighthouraverage(mda8)concentrationsexceedthestandardof70ppbinaugust.the numberofdayswheretheozonemda8overlandexceeds70ppbdecreaseswhenfeesare applied,asshowninfigure4.6.inallfeecases,therearefewerlocationsthatexceed70 ppbcomparedtothenofeecase.theghgfeecasehasmoreexceedancesthanthecases wherefeesareappliedtohips.withhiporcombinedfees,thereisanincreaseofupto threedaysperyearinthenumberofdaysofo3exceedancesinlosangeles.withghgfees, thereisalsoanincreaseofuptotwodaysperyearinnumberofdayswithexceedancesin LosAngeles,aswellasneartheTexasandLouisianacoastandafewothergridcells.

180 166 Figure4.6NumberofdaysinAugustwhereO3MDA8exceeds70ppb,onlywhensuch exceedancesoccurovertheuslandareas.forthenofeecasetherewere5106total exceedancesforthe31daysacrossall6019applicablegridcells,withthemostinasingle cellbeing26.withhipfees,1577totalexceedancesoccurinaugustwiththelargestinany onecellbeing26.forghgfees,25isthelargestinanysinglelocationand3031total exceedancesoccur.forcombinedfees25isthelargestinanysinglecelland1428 exceedancesoccur CostsandBenefits ThechangesincostsfromtheMARKALresultsarepresentedinTable4.3. Cost Increase representstheincreaseincostoftheenergysystemin2045whenfeesare appliedcomparedtothebasecase,presentedin2005usd.thecostsintable4.3are calculatedwithinvestmentcostsannualizedoverthelifetimeofthetechnology.revenues collectedintheformoffeesarenotincludedinthiscostincrease,becausethisexpense couldbeusedinmanyways,includingoffsettingthecostofemissionsreductionsinthe energysystemorusingthemtoreducecarecostsfortheremainingexternalities.

181 167 Therefore,wepresentthisvalueseparatelyinthe FeesCollected column.thecost increasesrepresentonly1v2%ofthetotalsystemcost,andthefeescollectedincreasethe totalenergysystemcostby6v15%.wedonotpresentregionalcostresultsinmarkal, becausenotallcostsareassignedtoaregion.enduseprocessesareassignedtoaregion, butupstreamprocessessuchasfuelextractioncanhavelargecoststhatarenotallocated toaregion.also,intervregionaltradingisallowedsoinvestmentinapowerplantinone regionmaysupplydemandinadifferentregion. Table4.3EnergysystemcostsassociatedwithfeesfromMARKALinmillion2005USD. Fees CostIncrease Collected HIP '$76,322'' $271,783 Combined '$91,273'' $691,387 GHG '$48,315'' $439,874 Weanalyzethemortalitybenefitsbyregion,withourfindingspresentedinTable 4.4.Thebenefitresultsforeachfeecaseindicatebenefitscomparedtothe2045NoFee case.region3isprojectedtohavelargeconcentrationreductions(seefigs.4.3v4.6),and, asdisplayedintable4.4,therearelargemortalityrelatedbenefitsforthisregionaswell. Inregion9fortheHIPfeecase,thereisanozonedisbenefitassociatedwithconcentration increasesinhighlypopulatedareasofsoutherncalifornia.toaccommodatesuch disbenefits,onepossibleapproachcouldbethatmoneycollectedfromthefeescouldbe usedtooffsetthisdisparitybyhelpingtosubsidizemedicalbillsthatmayberelatedtohigh ozoneconcentrations.region8hasalargepercentagedecreaseinpm2.5concentrations,

182 168 butthelowconcentrationinthenofeecaseandthelowpopulationdensityleadtolow benefits.thepercentreductionofozoneislargestinregion6,butthereductioninhealth impactsforozoneismuchlargerinregion5becausetherearereductionsinmore populatedareaswherethereisalargernumberofpotentiallyimpactedpeople. Followingthetrendforairquality,thebenefitsarelargestforthecombinedfeecase andlowestwithghgfees.thepm2.5benefitsforcombinedfeesareonly3%largerthan thoseforhipfees,butthereismoredistinctionintheo3benefits,wherethereisa22% increaseino3relatedmortalitybenefitswithcombinedfeescomparedtohipfeesalone. TheairqualityrelatedcoVbenefitsofGHGfeesaremuchlower.TheO3relatedmortality benefitswithghgfeesareonly24%aslargeastheo3benefitswithhipfees.thepm2.5 mortalityrelatedcovbenefitsare49%aslargeasthehipfeepm2.5benefits.astheo3 benefitsaresomuchsmallerthanthepm2.5benefits,thedifferenceintotalmortality reductioniswithinonepercentofthedifferenceinpm2.5benefits. Table4.4MortalityrelatedbenefitsbyregioninmillionsofUSD. Althoughthebenefitvaluationisdominated(99%)byreducedprematuremortality, thereareotheravoidedhealthimpactsassociatedwiththefeecasesanalyzedhere.the nonvmortalityhealthimpacts,presentedintable4.5,aremuchsmallerinmonetaryterms

183 169 thanthemortalityimpacts.whilewepresenttotalvaluationhere,incidenceandvaluesfor individualhealthendpointscanbefoundintheappendix. Table4.5ThebenefitsassociatedwiththefeecasesinMillionsofUSD.TheDamageVscaled emissionsarecalculatedusingequation4.6forghgandhipdamagesusingtheemissions changesfrommarkal. Damage Scaled Emissions GHG Scaled HIP Scaled MARKAL MARKAL Emissions Emissions PM 2.5 adult mortality Mortality Benefit PM 2.5 infant mortality O 3 mortality Non-Mortality Benefit O 3 nonmortality Bycomparingthedamagescaledemissionstothebenefitswecanevaluatehowwell thelesscomputationallyintensivescalingcalculationperformsintermsofestimationof nationvwidebenefits.themainsourceofthedifferencesbetweenthedamagescaled emissionsandthecalculatedbenefitsisduetopopulationincrease.thefannetal.(2012) valuesarebasedonpopulationin2016.inthefannetal.(2012)papertheycalculatethe benefitspertonofemissionsfor2005and2016andfindanaverageincreaseof36%in benefitpertonoveronlyelevenyears.ifwecalculatebenefitsfora2016populationforthe HIPfeecasekeepingallelseequal,wefindadultmortalityvaluesbasedonKrewskietal. (2009)of$233billion,infantmortalitybasedonWoodruffetal.(2006)of$548millionand totalpm2.5benefitsof$235billion.thisisactuallyslightlylessthanourdamagescaled emissionscalculation.itilluminatesthatthereisa73%increaseinbenefitsdueonlytothe increaseinpopulation.thisindicatestheimportanceofrevevaluatingfeesovertime. PM 2.5 nonmortality HIP $73,057 $256,775 $402,739 $642 $8,998 $137 $3,761 Combined $101,186 $260,412 $413,664 $659 $10,970 $169 $3,857 GHG $83,839 $154,782 $198,093 $309 $2,172 $31 $1,879 Wecalculatebenefitsusingthesamemortalityhealthimpactfunctionsusedby Fannetal.(2012),whichwasthebasisofourfeeestimates,andmanyofthesamehealth

184 170 impactfunctionsforthenonvmortalityhealthimpacts.wealsoconsidersomehealth impactfunctionsthatwerenotavailablewhenthedamageestimateswerecalculated.fann etal.(2012)usedcamxwith12kmgridresolutiontocalculatetheairqualityassociated withtheiremissionsscenarios,sotheremaybedifferencesbetweencamxandcmaq.we alsoaggregatesomeoftheindustrialsectorsindeterminingourfeesasnotallofthe industrialsectorsthatbenefitsarecalculatedforhaveexactmatchesinthemarkal database.forinstance,ironandsteelmanufacturinghashigherbenefits/ton,whichmight becapturedinourbenefitsestimates,butisnotcapturedinourdamagevscaledemissions. TheFannetal.(2012)studyonwhichthefeesarelargelybasedonlycalculateddamages forpm2.5,soallo3benefitsareexpectedtobeinadditiontothedamagescaledemissions. AnotherreasonforthediscrepancyinbenefitscalculatedwithBenMAPVCEcomparedto thedamagescaledemissionshastodowiththedifferenceinimpactsofemissionsfrom differentfacilities.althoughwecalculateemissionsreductionsbyregion,thelocationof 2007facilitieswithintheregionsprovidesmorelocalinformationthanjustreducing concentrationsbyacertainpercentageacrosstheregion.withthedamagescaled emissionsapproach,thelocationdependenceisonlycapturedbythesourcetype,asthe marginaldamagesusedarethesameacrossthecountry,althoughpopulationdensity acrossthecountryisnot.usingsectorbaseddamageestimatescapturesthetypical proximitytolargeurbanareas,butthecombinedcmaqandbenmapvcemethodologygoes astepfurthertoalsoaccountforthesizeofthoseurbanareas.also,moreofthenonv linearitiesassociatedwithozonearecapturedusingcmaqandbenmapvce,althoughthis contributesasmallerfractionofthetotaldamages.

185 171 Analyzingdamagescaledemissionsalsoallowsustotracethebenefitstoemissions ofspecificpollutants.figure4.7presentsthedamagescaledmarkalemissionsforthehip feecaseseparatedbypollutantandsector.althoughpm2.5emissionsaresmallcomparedto emissionsofotherpollutants,thedamagescaledemissionvalueforpm2.5islargebecause themarginaldamagesassociatedwithpm2.5aresignificant.thisisbecausepm2.5 concentrationsleadtolargehealtheffects,andallpm2.5emissionscontributetopm2.5 concentrationsasopposedtoemissionsofprecursorspecieswhereonlyafraction contributestopm2.5concentrations.thereissignificantuncertaintyinthebenefitofpm2.5 emissionsreductions,however,especiallyconsideringthelargefractionassociatedwith upstreamemissions.mostofthepm2.5upstreamemissionsreductionsareassociatedwith extractionprocessessuchasmining,whicharelikelytooccurfurtherawayfromurban centers.inthedamagescaledemissionreductions,thismeansthatthemarginaldamage valueusedmayoverestimatethemarginaldamagesassociatedwithmining,asthedamage valueassumesthatupstreamemissionsareaveragedacrosselectricitygeneration, industrialuse,andtransportation.similaruncertaintiesmayaffectthebenefitsestimated usingcmaqandbenmap.inthecmaqmodeling,upstreamemissionsreductionsare appliedtoallpm2.5emissionssourcesalthoughthebulkofthereductionsoccuratafew remotesources.theupstreamemissionsratesarealsolikelytobemuchlesscertainthan emissionsfromsourcessuchaselectricity.

186 172 NOxELC2,305 NOxIND634 NOxother7678 PM10ELC289 PM10IND1,194 PM10other9,882 PM2.5ELC6,083 PM2.5IND17,256 PM2.5upstream92,273 PM2.5other61,280 SO2ELC35,509 SO2IND31,165 SO2other5,236 VOCELC13 VOCINDV168 VOCotherV516 Figure4.7DamagescaledemissionsbypollutantandemissionsourcefortheHIPfeecase. ValuesareinMillionUSD.INDemissionsarefortheindustrialsectorandELCemissions arefortheelectricsector. Wenextconsiderthenetbenefitsoftheairqualityandclimatepolicies.Thenet benefitsarethesumofthehealthandclimatebenefitslessthecostincreasefrommarkal. Tocalculatethehealthbenefits,wesumoverthemortalitiesandO3andPM2.5nonV mortalitybenefitsfrombenmapvceintable4.5.forclimatebenefits,weusetheghg damagescaledemissionsvalueintable4.5,andthecostscanbereadfromthe Cost Increase columnintable4.3.for2045,thetotalhealthbenefitsfromthehipfeecaseare $416billion,theclimatebenefitsare$73billion,andthenetbenefitsare$413billion.The totalhealthbenefitsfromtheghgfeecaseare$202billion,theclimatebenefitsare$84

187 173 billion,andnetbenefitsare$238billion.thetotalhealthbenefitsforthecombinedfeecase are$439billionwithclimatebenefitsof$101billionandnetbenefitsof$338billion. 4.4Discussion WhendamageVbasedfeesonemissionsareincludedintheUSenergysystem,air qualityimprovesforalmostallareasofthecountry.asexpected,thehealthrelatedbenefits andairqualityimprovementsarelargestforthecombinedfeecaseandlowestfortheghg feecase.however,theestimatedbenefitsareonlyslightlyhigherforthecombinedfeecase thanthehipfeecase,andthenetbenefitsarehighestforthehipfeecase.thisisbecause ofadditionalcostincreasesassociatedwithreducingghgemissionsthatareincludedin thecombinedfeecaseandsmallerbenefitsassociatedwithghgemissionreductions. Pollutantconcentrationsaretypicallyreducedmostintheregionswheretheemissionsare reducedmost,butinsomeregionso3concentrationschangeverylittleorincreaselocally despitedecreasedemissions.astherearefewoptionstoreducevocemissionsinthe MARKALmodel,theunchangingO3mayoccurinareasthatareVOClimited,inwhichcase thereductioninnoxemissionshaslittleeffectontheo3concentrations. Whenfeesarenotconsideredaspartofthecost,benefitsarelargerthanthecostsof thepolicy.althoughthefeespaidincreasetheenergyprice,theassociatedemissionsalso affectthewellvbeingofthepopulationtoasimilardegree.ifthefeescollectedareput towardreducingthecostofexternalitiesbythoseaffected,itcouldfurtherreducethecost ofthelargerenergyvenvironmentvhealthsystem.otherwise,thefeespaidwillbe governmentrevenueandmayoffsetothertaxespaidorwouldotherwiseimprovesocial

188 174 welfare.duetothelargequantityoffeescollected,itisworthcarefulconsiderationofhow thatrevenueisused. TheGHGdamagescaledemissionsprovidetheclimatebenefitorcoVbenefitofthe policies.theclimatecovbenefitisalwayssmallerthantheairqualitybenefit,butsome studies(mooreanddiaz,2015;dietzandstern,2015;lontzeketal.,2015)suggestthat climatedamagesmaybeanunderestimateastherearestillmanyuncertainties surroundingclimatechangepredictions.eveninthehipfeecase,theclimatecovbenefits areonly13%lessthantheclimatebenefitsoftheghgfeecase.thehealthbenefitsforthe GHGpolicyherearesimilartothosefoundinThompsonetal.(2014)forhealthcoVbenefits ofclimatepolicies,whichstudiedawiderrangeofclimatepolicies,butdidnotinvestigate airqualityorcombinedpolicies. ThebenefitsassociatedwithPM2.5inthispaperarelargerthanthosefoundinthe PMNAAQSRIA(U.S.EPA,2012b)becausethechangesinairqualityarelargerandoccur acrossmoreoftheusandweareanalyzingayearfurtherinthefuturewherethe populationislarger,sotherearemorepeoplethatcouldbeaffectedbypollution.theo3 relatedimpactsaresimilartothosefoundintheozonenaaqsria(usepa,2015a). ThelargestcomponentofthebenefitestimateismortalityassociatedwithPM2.5due tothelargemonetaryvalueassociatedwithmortalityaswellasthelargedecreasesin modeledpm2.5concentrations.thelowestmeasuredlevel(lml),orlowestmeasuredpm2.5 concentration,fordeterminingthehealthimpactfunctionsishigherthansomeofthe concentrationsmodeledhere,whichmeansthatthereisuncertaintyintheestimatesfor PM2.5benefitsbecausetheshapeofthehealthimpactfunctionsmaybedifferentatthese

189 175 lowerconcentrations.forkrewskietal.(2009)thelmlis5.8µg/m3.itisobviousfrom Figure4.3thatPM2.5concentrationsin2045insomeregionsareoftenprojectedtobe belowthislevel,thusthereisuncertaintyinthepm2.5relatedbenefitsestimatesinthese regions.therearealsouncertaintiesinthehealthimpactfunctionsthemselvesfor concentrationsabovethisthreshold.the95 th percentileconfidenceintervalforthe valuationofkrewskietal.(2009)benefitsgiventhepopulationandairqualityinthisstudy rangesbyanorderofmagnitude. Duetocomplexchemistryandtransportaswellasunevenpopulationdistribution, weexpectedasignificantdifferencebetweenthebenefitscalculationandthedamage scaledemissions.asexemplifiedbytheeffectofpopulationgrowth,thepopulation exposedtoemissionsishighlyimportantinevaluatingbenefits.weexpectedthatby combiningcmaqandbenmapwewouldbebetterabletocapturethedifferencesin marginaldamagesacrossemissionlocations,sincethedamagespresentanaveragevalue. Onereasonthedifferencesmaybesmallisthat,withinaregion,theemissionsfromsimilar sourcetypesarereducedequally,soifanindividualfacilityhasmuchdifferentmarginal damagesthatisnotcapturedhere.wealsoevaluatedaggregatedresultstoregionaland nationallevels,andthedifferencebetweenthetwomethodsmaybelargerforindividual counties.itispossiblethattherearemoredifferencesifthedifferencebetweenthetwo methodsweretobeanalyzedatafinerresolution,eitherbyreducingemissionsmore specificallythanbythenineregionsusedhere,oriftheairqualitymodelingandbenefit calculationweretobeperformedatahigherresolution,whichmaybettercapturelocalized densepopulations(pungerandwest,2013).similarly,somelocationinformationis capturedinthedamagescaledemissionsbyusingdifferentvaluesfordifferentsectors.an

190 176 analysisusingasinglemarginaldamageestimatesforallemissionsmaynotmatchthe morerigorouslycalculatedvaluesasclosely. Thetreatmentofemissionschangesthroughscalingfactorsintroducessome uncertaintyintheresultsaswell.becausethismethodologyreducessomeemissionsnot relatedtoenergyuse,ourresultslikelyoverestimatetheairqualityandhealthbenefits associatedwiththefees.oneexampleofthisistheimprovementinairqualitynear biomassburningevents,whichinpracticewouldnotoccurduetofees.themarkal modelingalsointroducesuncertaintiesbecauseitisaninelasticmodel;therefore,we cannotcapturetheeffectfeesmayhaveonreducingdemandforenergyservices,suchasa reductionintravelduetohighergasolinepriceswithfees.thereisalsothepossibilitythat thefeeswillleadtothedevelopmentofnewer,lessexpensivetechnologiesthatreduce emissions.themodelcapturessimilarprocessesby,forexample,decreasingsolarcosts overtime,butdoesnotcapturemorenoveltechnologiesorthepossibilityoffaster decreasesincost. Theresultsofthisresearchcaninformpolicydecisionsaboutsimilarfeestructures. Oneimportantpointthatfuturepolicymakersshouldtakeawayfromtheseresultsisthat forthispolicytobecostvneutral,theultimateuseofthefeesisimportant.insomecases, smallareasexperienceairqualitydisvbenefitsfromthefees,inwhichcasetherevenue couldbeputtowardoffvsettingsomeofthecostsassociatedwiththatworsenedairquality. Anotherimportantresultrelevanttopolicyistheimpactofpopulationonthebenefits. Giventhatthisissuchanimpactfulcomponent,feesshouldbereVevaluatedovertime.Also, incalculatingthebenefitsofanypolicy,whetherthatpolicyusesfeesornot,thepopulation

191 177 changeshouldbefactoredintothevaluationofbenefits.thisistypicallydonewhen evaluatingpolicybenefitswithbenmap,butifusingdamagescaledemissionstoestimate benefitsoffuturepolicy,thedamagesshouldbescaledortakethepopulationincreaseinto accountinsomeway.forinstance,ifcomparingthebenefitofseveralpoliciesinafuture year,damagescaledemissionscouldbeusedifthedamagesarecalculatedbasedonthe futureyearofinterest. Althoughthereareuncertaintiesassociatedwithestimatingtheeffectoffuture emissionsreductions,itisstillanimportantexercisetoundertakewhenconsidering policies.additionalinformationaboutlikelylocationsofconcentrationreductions associatedwithapolicyleadstomoreinformedbenefitcalculations.analyzingthe concentrationchangesassociatedwithemissionschangesisalsousefulconsideringthe nonvlinearitiesinairchemistryparticularlyforozonebenefits.wealsofindthatthe changingpopulationwithtimehasalargeimpactonthebenefitofemissionsreductions. 4.5Appendix 4.5.1%CMAQ%validation% WeranCMAQbeforeapplyingthefactorsshowninTable4.1andcomparedthese concentrationstomeasuredconcentrationsfor2007tovalidatethemodelrun.the observationsandmodelresultsarecomparedforozone,pm2.5,sulfate,andnitratebelow. ThemonthlyaveragePM2.5concentrationsateachlocationarecomparedandthedaily1 st maxhourconcentrationofo3arecompared.theobservationdatacomesfromepa saqs DataMart(O.USEPA,2016).ValueslistedasannualhererefertocomparisonsofFebruary, May,August,andNovembermodel/observationpairsallatonce.

192 'PM2.5' Table4.6PM2.5evaluationstatistics(MdnBisthemedianbiasinµg/m 3,MdnEisthe Medianerrorinµg/m 3,NMdnBisthenormalizedmedianbiasin%,NMdnEisthe normalizedmedianerrorin%,nmbisthenormalizedmeanbiasin%,nmeisthe normalizedmeanerrorin%,rmseistherootmeansquarederrorinµg/m 3,andRis Pearson scorrelationcoefficient.) PM2.5 total MdnB MdnE NMdnB NMdnE NMB NME RMSE R February May August November Annual Sulfate MdnB MdnE NMdnB NMdnE NMB NME RMSE R February May August November Nitrate MdnB MdnE NMdnB NMdnE NMB NME RMSE R February May August November Theequationsusedtocalculatethevaluesintheabovetable(andthetableforO3below) are:

193 179 MdnB = median(c M C o ) N (7) MdnE = median C M C o N (8) NMdnB = median(c M C o ) N median(c o ) N 100% (9) NMdnE = median C M C o N 100% (10) median(c o ) N P N 1 NMB = (C M C o ) P N 1 C 100% (11) o P N 1 NME = C M C o P N 1 C 100% (12) o RMSE = p < (C M C o ) 2 > (13) wherecmisthemodeledconc,coistheobservedconcentration,nisthenumberofmodelv observationpairs.mdnbisthemedianbias,mdneisthemedianerror,nmdnbisthe normalizedmedianbias,nmdneisthenormalizedmedianerror,nmb=normalizedmean bias,nme=normalizedmeanerror,rmse=rootmeansquareerror,andrispearson s correlationcoefficient.theangledbracketsrepresentanaverage. Themodelvalidationforour2007casedoesnotperformaswellasthe2007case thatepausedintheregulatoryimpactanalysis(ria)forthepmnationalambientair QualityStandards(NAAQS)revision.WeuseamorerecentCMAQversionhere(5.0.2 comparedto4.7.1).wealsousealowerresolutionof36kmcomparedtotheepa12km.in theria,sulfatemodelpredictionswerebiasedlowcomparedtoobservations.theyfounda normalizedmeanbiasofv25%.ourmodeledsulfateislessbiased,butthenormalized meanerrorforeachseasonishigherthanthatfoundintheria.fornitrate,thebiasinthe RIAvariesbyseasonandlocation,andtheaveragenormalizedmeanerroris71%.The normalizedmeanerrorfornitrateinourevaluationishigher,butnotabovetherangeof valuesseenintheriaonaregionalbasis.

194 180 Thescatterplotsandhistogramsshoweachdayincomparison,e.g.Feb124hr averageobservationandfeb124hraveragemodeledconcentrationatthatlocation,for eachobservationlocationanddaymodeled.thissectionpresentsvalidationplotsfortotal PM2.5concentration,speciatedresultsarepresentedlater. Figure4.8PM2.5validationscatterplot

195 181 Figure4.9PM2.5validationhistogram. Themapplotshowsthemeanvalueofthe24houraverageconcentrationsacross themonth.

196 182

197 183 Figure4.10(aVd)MonthlymapsofmodeledandobservedPM2.5for2007.

198 184 Wealsolookedatindividualspeciesperformanceforsulfateandnitrate. Sulfate Figure4.11Sulfatevalidationscatterplots.

199 185 Figure4.12Sulfatevalidationhistogram.

200 186 Nitrate: Figure4.13Nitratevalidationscatterplots.

201 187 Figure4.14Nitratevalidationhistograms 'Ozone' Thesameanalysisisalsoperformedforozone. Table4.7Ozoneevaluationstatistics(MdnBisthemedianbiasinppb,MdnEistheMedian errorinppb,nmdnbisthenormalizedmedianbiasin%,nmdneisthenormalizedmedian errorin%,nmbisthenormalizedmeanbiasin%,nmeisthenormalizedmeanerrorin%, RMSEistherootmeansquarederrorinppb,andRisPearson scorrelationcoefficient.) O3 MdnB MdnE NMdnB NMdnE NMB NME RMSE R February May August November

202 188 Figure4.15O3validationscatterplots(ppb).

203 189 Figure4.16O3validationhistograms.

204 190

205 191 Figure4.17(aVd)ModeledandobservedO3concentrationsfor2007.

206 $Seasonal$CMAQ$PM$results$ Herewepresentthemedianofthe24houraveragePM2.5concentrationineachmodeled month.figure4.4inthemaintextpresentstheannualaverageresults. (a)

207 193 (b) (c)

208 194 (d) Figure4.18(aVd)MonthlyaveragePM2.5concentrations %Emissions%and%Concentration%Reductions Table4.8TheapproximatepercentchangeinemissionsfromtheNoFeecaseaswellasthe percentchangeinconcentrationfromthenofeecase.theemissionsreductionsarebased ontotalmarkalemissionsreductionsforeachspeciesbyregionandmaynotaccurately representtheemissionsreductionsincmaqdototheinclusionofnonvenergysector emissionsincmaq.